Question

a. identify all accounts necessary to record the transaction properly.

b. Identify the total dollar impact of the transaction on total assets, total liabilities, total stockholders' equity, total revenues and total expenses.

1. ABC Company forms by issuing 200000 shares of $1 par value stock. The total contributed capital provided to the company from the investors

2. ABC Company signs a rental agreement with Jakes Rentals to rent equipment for the upcoming year. At the signing of the rental agreement, ABC Company paid a $15,000, which reflects the fist three month rental. Determine the accounts and transaction analysis from the perspective of ABC Company.

3. ABC negotiates with its bank a line of credit. The line of credit provides available funding of $120,000 and can only be used to purchase inventory. ABC Company has not taken any draws from this line of credit.

Answer 1

a.)	All accounts necessary to record the transaction

	(i)	Cash
	(ii)	Share Capital- $1 par value
	(ii)	Prepaid Rent
b.)	S,No.	Account Titles & Explanation	Debit $	Credit $
	1	Cash	200,000
		Share Capital - $ 1 Par value		200,000
		( 200,000 x 1 )
		( to record issuance of 200,000 shares )
	2	Prepaid rent	15,000
		Cash		15,000
		( to record rent paid for upcoming year )
	3	No entry as Company has not taken any draws.
		Total Assets	Amount in $
		Cash ( 200,000 - 15,000 )	185,000
		Prepaid Rent	15,000
		Total Assets	200,000
		Total stockholders' equity	$ 200,000
		Total Liabilities	No Impact
		Total revenue	No Impact
		Total Expenses	No Impact