Chapter 2, Problem 10E

Analyzing Accounting Equation Effects, Recording Journal Entries, and Summarizing Financial Statement Impact

Rawlco Communications operates 15 radio stations. The following events occurred during September.

1. a. Placed an order for office supplies costing $2,000. Supplier intends to deliver later in the month.
2. b. Purchased equipment that cost $30,000; paid $10.000 cash and signed a promissory note to pay $20,000 in one month.
3. c. Negotiated and signed a one-year bank loan, and then deposited $5,000 cash in the company’s checking account.
4. d. Hired a new finance manager on the last day of the month.
5. e. Received an investment of $10,000 cash from the company’s owners in exchange for issuing common shares.
6. 1. f Supplies [ordered in (a)] were received, along with a bill for $2,000.

Required:

1. 1. Indicate the specific account, amount, and direction of effects for each transaction on the radio station’s accounting equation. If an event is not considered a transaction, explain why.
2. 2. Prepare journal entries to record each transaction.
3. 3. Rawlco began the month with $220,000 in total assets. What total assets would be reported on the balance sheet after events (a)-(f)?