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The following transactions occurred during March 2021 for the Wainwright Corporation. The company owns and operates a wholesale warehouse. Issued 52,000 shares of common stock in exchange for $520,000 in cash. Purchased equipment at a cost of $84,000. $21,000 cash was paid and a notes payable to the seller was signed for the balance owed. Purchased inventory on account at a cost of $158,000. The company uses the perpetual inventory system. Credit sales for the month totaled $230,000. The cost of the goods sold was $138,000. Paid $7,000 in rent on the warehouse building for the month of March. Paid $7,450 to an insurance company for fire and liability insurance for a one-year period beginning April 1, 2021. Paid $138,000 on account for the merchandise purchased in 3. Collected $103,500 from customers on account. Recorded depreciation expense of $2,100 for the month on the equipment. Required: Analyze each transaction and show the effect of each on the accounting equation for a corporation. (Amounts to be deducted should be indicated by a minus sign. Enter the net change on the accounting equation.)

Respuesta :

TomShelby

Answer:

        Assets=   Liabilities+  Equity

a)Issuance  520000    520000

b)Purchase of     84000     63000  

equipment         -21000    

c)of inventory    158000          158000  

d)sales   230000    230000

e)cost of sale   -138000           -138000

f)rent        -7000   -7000

g)prepaid   7450                            

insurance  -7450    

h)payment     -138000  -138000  

of accounts

i)collect  103500    

on customer -103500    

g)dep expense    -2100    -2100

           685900     83000    602900

Explanation:

b) increase for the acquired equipment but decrease from the cash used

c) the sales revenues represent earnigns to the company thus, increase equity

d) e) g) represent expenses thus, decrease equity

g) the prepaid insurance increase assets btut assets also decrease from the cash used to purchase

anthougo

Transactions' Effects on the accounting equation of Wainwright Corporation are as follows:

Accounting equation:

                Assets                         =    Liabilities     + Stockholders' Equity

1.               $520,000                   =    $0                 +       $520,000

2.   $84,000+ $21,000                =    $63,000       +       $0

3.               $158,000                   =   $158,000       +       $0

4.              $230,000                   =    $0                 +       $230,000

5.             -$138,000                   =     $0                 +      -$138,000

6.                -$7,000                    =    $0                  +         -$7,000

7.                -$7,450                    =    $0                  +         -$7,450

8.            -$138,000                    =  -$138,000       +        $0

9.            $103,500 -$103,500  =    $0                  +       $0

10.              -$2,100                    =    $0                  +      -$2,100

Transaction Analysis:

1. Cash $520,000 Common Stock $520,000

2. Equipment $84,000 Cash $21,000 Notes payable $63,000

3. Inventory $158,000 Accounts payable $158,000

4. Accounts receivable $230,000 Sales revenue $230,000

5. Cost goods sold $138,000 Inventory $138,000

6. Rent Expense $7,000 Cash $7,000

7. Prepaid Insurance $7,450 Cash $7,450

8. Accounts payable $138,000 Cash $138,000

9. Cash $103,500 Accounts receivable $103,500

10. Depreciation expense $2,100 Accumulated Depreciation $2,100

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