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

Exercise 46

Recording Transactions (in a Journal and T-Accounts); Preparing a Trial Balance; Preparing and Interpreting the Balance Sheet
Bearings Brakes Corporation (B B) was incorporated as a private company on June 1, 2013. The company's accounts included the following at June 30, 2013:

During the month of July, the company had the following activities:
a. Issued 6,000 shares of common stock for $600,000 cash.
b. Borrowed $60,000 cash from a local bank, payable in four years.
c. Bought a building for $166,000; paid $66,000 in cash and signed a three-year note for the balance.
d. Paid cash for equipment that cost $90,000.
e. Purchased supplies for $90,000 on account.
Required:
1. Analyze transactions ( a )-( e ) to determine their effects on the accounting equation. Use the format shown in the demonstration case on page 68.
2. Record the transaction effects determined in requirement 1 using a journal entry format.
3. Summarize the journal entry effects from requirement 2 using T-accounts.
4. Prepare a trial balance at July 31, 2013.
5. Prepare a classified balance sheet at July 31.
6. As of July 31, 2013, has the financing for B B's investment in assets primarily come from liabilities or stockholders' equity