Chapter 2, Problem 2.4E

Determining Financial Statement Effects of Several Transactions

The following events occurred for Johnson Company:

1. a. Received investment of cash by organizers and distributed to them 1,000 shares of SI par value common stock with a market price of $40 per share.
2. b. Purchased $15,000 of equipment, paying $3,000 in cash and owing the rest on accounts payable to the manufacturer.
3. c. Borrowed $10,000 cash from a bank.
4. d. Loaned $800 to an employee who signed a note.
5. e. Purchased $13,000 of land: paid $4,000 in cash and signed a mortgage note for the balance.

Required:

For each of the events (a) through (e), perform transaction analysis and indicate the account, amount, and direction of the effect (+ for increase and − for decrease) on the accounting equation. Check that the accounting equation remains in balance after each transaction. Use the following headings: