Answered: Required: 1. Indicate the effects of…

Name: Steve’s Outdoor Company purchased a new delivery van on January 1 for
Uploaded: 2024-03-20T06:32:37.000Z
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Description: Steve’s Outdoor Company purchased a new delivery van on January 1 for $58,000 plus $4,900 in sales tax. The company paid $13,900 cash on the van (including the sales tax), signing an 8 percent note for the $49,000 balance due in nine months (on Septe

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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Steve’s Outdoor Company purchased a new delivery van on January 1 for $58,000 plus $4,900 in sales tax. The company paid $13,900 cash on the van (including the sales tax), signing an 8 percent note for the $49,000 balance due in nine months (on September 30). On January 2, the company paid cash of $750 to have the company name and logo painted on the van. On September 30, the company paid the balance due on the van plus the interest. On December 31 (the end of the accounting period), Steve’s Outdoor recorded depreciation on the van using the straight-line method with an estimated useful life of 5 years and an estimated residual value of $5,800.

Not sure why my interest amount is wrong.. Please see pic

Intere

Required:
1. Indicate the effects of each transaction on the accounting equation. (Enter decreases to account categories as negative amounts.
If the transaction does not impact the accounting equation choose "No effect" in the first column under "Assets".)
X Answer is complete but not entirely correct.
Date
Assets
Liabilities
Stockholders' Equity
January 1
Equipment (Van)
62,900
Short term note payable
49,000
Cash
|(13,900)
January 2
Equipment (Van)
750
Cash
(750)
September
Cash
(51,940)
Short term note payable
(49,000)
Interest expense
2,940
30

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