ons occurred during the year ending De ed company called BETA Ltd. A acquired equipment valued at $490,0 - shares of the company. BETA borrowed $500,000 cash from Br -nd in exchange. The interest rate is 5% lly on December 31. In addition also or
ons occurred during the year ending De ed company called BETA Ltd. A acquired equipment valued at $490,0 - shares of the company. BETA borrowed $500,000 cash from Br -nd in exchange. The interest rate is 5% lly on December 31. In addition also or
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Pls help ASAP. Pls show all work and calculations.
Transcribed Image Text:The following transactions occurred during the year ending December 31,
2021 for a newly formed company called BETA Ltd.
(a) On January 1, BETA acquired equipment valued at $490,000 in exchange
for 81,667 common shares of the company.
(b) Also on January 1, BETA borrowed $500,000 cash from Brossard Bank
issuing a 10 year bond in exchange. The interest rate is 5% per year, with
interest paid annually on December 31. In addition, also on December 31
each year, the principal is repayable in ten equal installments, beginning in
2021.
(c) On December 31, BETA Ltd. declared and paid a cash dividend of 10 cents
per share to shareholders. At this point there are five hundred thousand
common shares outstanding.
(d) The equipment that was acquired on January 1 has an estimated useful life
of twenty years, with estimated salvage value of zero. The company uses
the straight-line method. Recognize this transaction on December 31.
(e) On December 31, the transactions related to the bank loan should be
recorded.
REQUIRED
For each transaction described above, indicate how it would be recorded in the
company's accounts. Do so in a manner consistent with double entry
accounting: for each entry, show the date, nature of the account (asset,
liability, etc.), the account name, the increase or decrease and the amount.
EXAMPLE.
On January 1, X Ltd. received $6,000,000 cash from investors in exchange
for 1,000,000 common shares of the company.
Answer in two lines:
January 1. The asset account, Cash, increases by $6,000,000.
The
.... асcount,
by $.
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