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In: Accounting

FootCovers, Inc., with headquarters in Beaverton, Oregon, is one of the world’s leading manufacturers of athletic...

FootCovers, 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.

a. Purchased additional buildings for $182 and equipment for $270; paid $408 in cash and signed a long-term note for the rest.

b. Issued 110 shares of $2 par value common stock for $335 cash.

c. Declared $145 in dividends to be paid in the following year.

d. Purchased additional short-term investments for $7,816 cash.

e. Several FootCovers investors sold their own stock to other investors on the stock exchange for $90.

f. Sold $4,213 in short-term investments for $4,213 in cash.

Required: For each of the events (a) through (f), 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. (If no impact on the accounting equation leave cells blank. Enter your answers in millions.)

Solutions

Expert Solution

Asset = Liabilities + Stockholders equity
Transaction cash + Short term investment + Building + Equipment Dividendpayable + Long term Note payable common stock + Additional paid in capital + Retained earning
a -408 +182 +270 +44        [-408+182+272]
Balance -408 +182 +270 +44
b +36850    [110*335] +220    [110*2] 36630     [36850-220]
Balance 36442 +182 +270 +44 +220 +36630
c +145 -145
Balance 36442 182 270 145 44 220 36630 -145
d -7816 +7816
Balance 28626 7816 182 270 145 44 220 36630 -145
e
f +4213 -4213
Balance 32839 3603 182 270 145 44 220 36630 -145

**Transaction e is between investors and does not effect corporation financial transaction.

ekkarill92 answered 2 years ago
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