Chapter 2, Problem 5E

Determining Financial Statement Effects of Several Transactions

Nike. Inc., with headquarters in Beaverton. Oregon, is one of the world’s leading manufacturers of athletic shoes and sports apparel. The following activities occurred during a recent year. The amounts are rounded to millions.

1. a. Purchased additional buildings for $172 and equipment for $270: paid $432 in cash and signed a longterm note for the rest.
2. b. Issued 100 shares of $2 par value common stock for $345 cash.
3. c. Declared $145 in dividends to be paid in the following year.
4. d. Purchased additional short-term investments for $7,616 cash.
5. e. Several Nike investors sold their own stock to other investors on the stock exchange for $84.
6. f. Sold $4,313 in short-term investments for $4,313 in cash.

Required:

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

   

2. 2. Explain your response to event (e).