Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby

Exercise 22

Determining Financial Statement Effects of Several Transactions
The following events occurred for Favata Company:
a. Received $10,000 cash from owners and issued stock to them.
b. Borrowed $7,000 cash from a bank and signed a note due later this year.
c. Bought and received $800 of equipment on account.
d. Purchased land for $12,000; paid $1,000 in cash and signed a long-term note for $11,000.
e. Purchased $3,000 of equipment, paid $1,000 in cash and charged the rest on account.
Required:
For each of the events ( a) through ( e), perform transaction analysis and indicate the account, amount, and direction of the effect (+ for increase and for decrease) on the accounting equation. Check that the accounting equation remains in balance after each transaction. Use the following headings: