A company engages in the following transactions. What would it's balance sheet look like? 1. Issues 10,000 shares of $10 par value common stock for $150,000 in cash. 2. Issues 20,000 shares of common stock in exchange for land, buildings and equipment. The land appears at $80,000, the buildings at $170,000 and the equipment at $50,000 on the balance sheet. 3. Acquires raw materials with a list price of $50,000 on account from various suppliers. 4. Acquires additional manufacturing equipment with a list price of $5,500. It deducts a $550 discount and pays the balance in cash. The firm treats cash discounts as a reduction in the acquisition cost of the equipment. 5. Pays $400 in labor costs relating to installation of the equipment. 6. Finds that some of the raw materials (from item # 3) are defective. They had a list price of $300 and are returned to the supplier. No payment have yet been made for these. 7. Signs a contract to rent several cars beginning February 1. Pays the February rental of $1,000 in advance. 8. Pays some of the suppliers for purchases in item #3. Combined list prices are $34,000. Commonwealth pays in time to qualify for a 3% discount. The firm treats cash discounts as a reduction in the acquisition cost of the raw materials. 9. Acquires a warehouse costing $75,000. The firm makes a down payment of 10% and assumed a long-term mortgage for the balance. 10. The firm purchases 1,000 $0.001 par value shares of Apple Inc. for $66,000. This purchase is a short-term use of excess cash. The shares of Apple Inc. are traded on the NASDAQ Stock Exchange.
A company engages in the following transactions. What would it's balance sheet look like? 1. Issues 10,000 shares of $10 par value common stock for $150,000 in cash. 2. Issues 20,000 shares of common stock in exchange for land, buildings and equipment. The land appears at $80,000, the buildings at $170,000 and the equipment at $50,000 on the balance sheet. 3. Acquires raw materials with a list price of $50,000 on account from various suppliers. 4. Acquires additional manufacturing equipment with a list price of $5,500. It deducts a $550 discount and pays the balance in cash. The firm treats cash discounts as a reduction in the acquisition cost of the equipment. 5. Pays $400 in labor costs relating to installation of the equipment. 6. Finds that some of the raw materials (from item # 3) are defective. They had a list price of $300 and are returned to the supplier. No payment have yet been made for these. 7. Signs a contract to rent several cars beginning February 1. Pays the February rental of $1,000 in advance. 8. Pays some of the suppliers for purchases in item #3. Combined list prices are $34,000. Commonwealth pays in time to qualify for a 3% discount. The firm treats cash discounts as a reduction in the acquisition cost of the raw materials. 9. Acquires a warehouse costing $75,000. The firm makes a down payment of 10% and assumed a long-term mortgage for the balance. 10. The firm purchases 1,000 $0.001 par value shares of Apple Inc. for $66,000. This purchase is a short-term use of excess cash. The shares of Apple Inc. are traded on the NASDAQ Stock Exchange.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:A company engages in the following transactions. What would it's balance sheet look like?
1. Issues 10,000 shares of $10 par value common stock for $150,000 in cash.
2. Issues 20,000 shares of common stock in exchange for land, buildings and equipment. The land
appears at $80,000, the buildings at $170,000 and the equipment at $50,000 on the balance sheet.
3. Acquires raw materials with a list price of $50,000 on account from various suppliers.
4. Acquires additional manufacturing equipment with a list price of $5,500. It deducts a $550
discount and pays the balance in cash. The firm treats cash discounts as a reduction in the
acquisition cost of the equipment.
5. Pays $400 in labor costs relating to installation of the equipment.
6. Finds that some of the raw materials (from item # 3) are defective. They had a list price of $300
and are returned to the supplier. No payment have yet been made for these.
7. Signs a contract to rent several cars beginning February 1. Pays the February rental of $1,000 in
advance.
8. Pays some of the suppliers for purchases in item #3. Combined list prices are $34,000.
Commonwealth pays in time to qualify for a 3% discount. The firm treats cash discounts as a
reduction in the acquisition cost of the raw materials.
9. Acquires a warehouse costing $75,000. The firm makes a down payment of 10% and assumed a
long-term mortgage for the balance.
10. The firm purchases 1,000 $0.001 par value shares of Apple Inc. for $66,000. This purchase is a
short-term use of excess cash. The shares of Apple Inc. are traded on the NASDAQ Stock Exchange.
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