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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
(e) Suppose that on 31 Dec 2020 ABC purchased a new logistics and storage facility for
€100.000, to be
funded by an issuance on 31 Dec 2020 of 10.000
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
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.

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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