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ABC Company started business on January 1, 2016. The following transactions occurred in 2016:

1. On January 1, the company issued 10,000 common shares for $250,000.

2. On January 2, the company borrowed $50,000 from the bank.

3. On January 3, the company purchased land and a buliding for a total of $200,000 cash. The land was recently appraised at a fair market value of $60,000. (Note: Because the building will be depreciated in the future and the land will not, these two assets should be recorded in separate accounts.)

4. Inventory costing $130,000 was purchased on account.

5. Sales to customers totalled $205,000. Of these, $175,000 were sales on account.

6. The cost of inventory that was sold to customers in transaction 5 was $120,000.

7. Payments to suppliers on account totalled $115,000.

8. Collections from customers on account totalled $155,000.

9. Payments to employees for wages were $55,000. In addition, there was $2,000 of unpaid wages at year end.

10. The interest on the bank loan was recognized and paid for the year. The interest rate on the loan was 6%.

11. The building was estimated to have a useful life of 30 years and a residual value of $20,000. The company uses the straight-line method of depreciation.

12. The company declared dividends of $7,000 on December 15, 2016, to be paid on January 15, 2017.

Question:

Analyze the effects of each of the transactions on the basic accounting equation using a table like:

Dusihess prepare a set of manl TAKE5 have some limitations, which we'll see in the next section. to financial statements for SCL, but it Exhibit 2-3 Accounting Equation Template ASSETS LIABILITIES S/H EQUITY Bank Prepaid Interest Loan Common Retained /E Land A/P Payable Payable Shares Earnings DD Date Cash A/R Inv. Ins. Jan. 1 250,000 Jan. 1 100,000 Jan. 1 (1,100) Jan. 1 (65,000) Jan. 1 (1,800) Jan. 6 (180,000) 250,000 100,000 (1,100) E 65,000 1,800 180,000 Jan. 10 23,000 23,000 12: 1 21,000 13,000 12: 2 34,000 R (17,000)E (17,000) Jan. 20 11,000 (11,000) Jan. 22 (13,500) Jan. 25 (1,900 Jan. 26 (2 200 Jan. 28 (2,900) Jan 31(400 (13,500) (1,900)E (2,200)E (2,900) | E (400) DD (850) E (150) E (500) E Jan. 31 Jan. 31 Jan. 31 (850) 150) 500 113.2002.000 6,000 1,650 64,150 180 .000 9,500 --500- 100,000 250,000 7,000 367,000 367,000

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