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e) Suppose that on 31 Dec 2020 ABC purchased a new logistics and storage facility for €100.000, to be depreciated straight line over 10 years starting in 2021. This investment is funded by an issuance on 31 Dec 2020 of 10.000 preference shares with 5%/year cumulative dividends and €10/share Par value. Preference dividends shall only accrue and be payable in 2021. Answer the following questions:  Describe how this new investment and financing will change selected lines in the above Adjusted Trial Balance.  Use all relevant information in the above Adjusted Trial Balance, including the new financing, to show ABC’s Shareholder’s/Owner’s Equity as of 31 Dec 2020.

e) Suppose that on 31 Dec 2020 ABC purchased a new logistics and storage facility for €100.000, to be depreciated straight line over 10 years starting in 2021. This investment is funded by an issuance on 31 Dec 2020 of 10.000 preference shares with 5%/year cumulative dividends and €10/share Par value. Preference dividends shall only accrue and be payable in 2021. Answer the following questions:  Describe how this new investment and financing will change selected lines in the above Adjusted Trial Balance.  Use all relevant information in the above Adjusted Trial Balance, including the new financing, to show ABC’s Shareholder’s/Owner’s Equity as of 31 Dec 2020.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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(e) Suppose that on 31 Dec 2020 ABC purchased a new logistics and storage facility for
€100.000, to be depreciated straight line over 10 years starting in 2021. This investment is
funded by an issuance on 31 Dec 2020 of 10.000 preference shares with 5%/year
cumulative dividends and €10/share Par value. Preference dividends shall only accrue and
be payable in 2021. Answer the following questions:
 Describe how this new investment and financing will change selected lines in the
above Adjusted Trial Balance.
 Use all relevant information in the above Adjusted Trial Balance, including the new
financing, to show ABC’s Shareholder’s/Owner’s Equity as of 31 Dec 2020.

31 Dec 2020 Unadjusted Trial Balance Adjusting Entries Adjusted Trial Balance Accounts Debit Credit Debit Credit Debit Credit Cash € 120,000 € 120,000 Accounts Receivable 100,000 100,000 Notes Receivable 15,000 15,000 Interest Receivable € 1,500 1,500 Merchandise Inventory 130,000 130,000 Prepaid Insurance 2,000 € 1,000 1,000 Land 70,000 70,000 Buildings & Equipment 350,000 350,000 Accumulated Depreciation € 115,000 45,000 € 160,000 Accounts Payable 180,000 180,000 Notes payable Salaries Payable 25,000 25,000 15,000 15,000 Interest Payable Dividends Payable 1,200 1,200 20,000 20,000 Bond payables 100,000 100,000 Common stock (=Ordinary Share Capital) Additional Paid-in Capital (=Share Premium) 180,000 180,000 30,000 30,000 Retained Earnings 40,000 40,000 Sales Revenue 600,000 600,000 Interest Revenue 1,500 1,500 Rent Revenue 10,000 10,000 Cost of Goods Sold 408,000 408,000 Advertising Expense Salaries Expense 20,000 20,000 80,000 5,000 15,000 95,000 Interest Expense 1,200 6,200 Insurance Expense 1,000 1,000 Depreciation Expense 45,000 45,000 Totals 1,300,000 1,300,000 63,700 63,700 1,362,700 1,362,700
Transcribed Image Text:31 Dec 2020 Unadjusted Trial Balance Adjusting Entries Adjusted Trial Balance Accounts Debit Credit Debit Credit Debit Credit Cash € 120,000 € 120,000 Accounts Receivable 100,000 100,000 Notes Receivable 15,000 15,000 Interest Receivable € 1,500 1,500 Merchandise Inventory 130,000 130,000 Prepaid Insurance 2,000 € 1,000 1,000 Land 70,000 70,000 Buildings & Equipment 350,000 350,000 Accumulated Depreciation € 115,000 45,000 € 160,000 Accounts Payable 180,000 180,000 Notes payable Salaries Payable 25,000 25,000 15,000 15,000 Interest Payable Dividends Payable 1,200 1,200 20,000 20,000 Bond payables 100,000 100,000 Common stock (=Ordinary Share Capital) Additional Paid-in Capital (=Share Premium) 180,000 180,000 30,000 30,000 Retained Earnings 40,000 40,000 Sales Revenue 600,000 600,000 Interest Revenue 1,500 1,500 Rent Revenue 10,000 10,000 Cost of Goods Sold 408,000 408,000 Advertising Expense Salaries Expense 20,000 20,000 80,000 5,000 15,000 95,000 Interest Expense 1,200 6,200 Insurance Expense 1,000 1,000 Depreciation Expense 45,000 45,000 Totals 1,300,000 1,300,000 63,700 63,700 1,362,700 1,362,700
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