Practice Solutions Accounting

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Q1.Show the effect of each of the seven listed transactions on the balance sheet items of Carpet Center Plus. Indicate the new balances after the transaction of May 2 and each subsequent transaction. The effects of the May 1 transaction are already filled in to provide you with an example.

May| 1| Issued capital stock for $75,000.|
| 2| Purchased a small office building at a price of $58,000 for the land and $65,000 for the building. Paid $43,000 cash and signed a note payable for the balance.| | 8| Borrowed $15,000 from the bank. Signed a 60-day note payable for this amount.| | 16| Purchased copying machines, computers, and other office equipment for $19,000. Paid $9,000 cash and signed a note payable for the balance.| | 28| Sold an item of office equipment (computer) to a stockholder at its cost of $2,800. The stockholder paid $800 cash and promised to pay the balance within 30 days.| | 30| Paid $5,000 on the liability for the office equipment.| | 31| Collected $500 from the stockholder who had bought the computer.|

Answer:

| | Assets| =| Liabilities| +| Owners’ Equity| | | Cash| +| Accounts Receivable| +| Land| +| Buildings| +| Office Equipment| =| Notes Payable| +| Capital stock| May 1| | +$75, 000| | | | | | | | | | | | +$75,000| 2| | -43,000| | | | +$58,000| | +$65,000| | | | +$80,000| | | Balance| | $32,000| | | | $58,000| | $65,000| | | | $80,000| | $75,000| 8| | + 15,000| | | | | | | | | | + 15,000| | | Balance| | $47,000| | | | $58,000| | $65,000| | | | $95,000| | $75,000| 16| | - 9,000| | | | | | | | + $19,000| | + 10,000| | | Balance| | $38,000| | | | $58,000| | $65,000| | $19,000| | $105,000| | $75,000| 28| | + 800| | + $2,000| | | | | | - 2,800| | | | | Balance| | $38,800| | $2,000| | $58,000| | $65,000|...
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