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Weather Corporation provides you with a list of the following transactions. Please complete a transaction analysis...

Weather Corporation provides you with a list of the following transactions. Please complete a transaction analysis (report) for each transaction. Assuming that the company starts out with $100,000 in cash and $100,000 in contributed equity, what will its ending balance sheet look like? • Purchased inventory for $90,000 cash; sold 80% of the inventory for $200,000 ($180,000 for cash, $20,000 onaccount) • Received a small business loan of $200,000 and purchased PPE for $150,000 • Had cash expenses of $35,000 • Had non-cash expenses (depreciation) of $15,000 • Paid cash dividends of $6,000 • Prepaid business insurance for the next year in the amount of $5,000

Solutions

Expert Solution

100,000 in cash and $100,000 in contributed equity,

assets = liabilities + equity
100000 = 0 + 100000
100000 = 100000

• Purchased inventory for $90,000 cash

assets
cash + inventory = liabilities + equity
100000 + 0 = 0 + 100000
-90000 + 90000 = 0 + 0
10000 + 90000 = 0 + 100000

sold 80% of the inventory for $200,000 ($180,000 for cash, $20,000 on account)

assets = liabilities + owners equity
cash + inventory + account receivables = current liabilities + retained earings + equity
100000 + 0 + 0 = 0 + 0 + 100000
-90000 + 90000 + 0 = 0 + 0 + 0
180000 + 0 + 20000 = 0 + 200000 + 0
0 + -72000 + 0 = 0 + -72000 + 0
190000 + 18000 + 20000 = 0 + 200000 + 100000

Received a small business loan of $200,000 and purchased PPE for $150,000

assets = liabilities + owners equity
cash + inventory + account receivables + PPE = current liabilities + retained earings + equity
100000 + 0 + 0 + 0 = 0 + + 100000
-90000 + 90000 + 0 + 0 = 0 + 0 + 0
180000 + 0 + 20000 + 0 = 0 + 200000 + 0
0 + -72000 + 0 = 0 + 0 + -72000
200000 + 0 + 0 + 0 = 200000 + 0 + 0
-150000 + 0 + 0 + 150000 = 0 + 0 + 0
240000 + 18000 + 20000 + 150000 = 200000 + 128000 + 100000

• Had cash expenses of $35,000

prev bal 240000 + 18000 + 20000 + 150000 = 200000 + 128000 + 100000
-35000 + 0 + 0 + 0 = 0 + -35000 + 0
205000 + 18000 + 20000 + 150000 = 200000 + 93000 + 100000

Had non-cash expenses (depreciation) of $15,000

assets = liabilities + owners equity
cash + inventory + account receivables + PPE = current liabilities + retained earings + equity
100000 + 0 + 0 + 0 = 0 + 0 + 100000
-90000 + 90000 + 0 + 0 = 0 + 0 + 0
180000 + 0 + 20000 + 0 = 0 + 200000 + 0
0 + -72000 + 0 = 0 + -0 + 72000
200000 + 0 + 0 + 0 = 200000 + 0 + 0
-150000 + 0 + 0 + 150000 = 0 + 0 + 0
-35000 + 0 + 0 + 0 = 0 + -35000 + 0
0 + 0 + 0 + -15000 = 0 + -15000 + 0
205000 + 18000 + 20000 + 135000 = 200000 + 78000 + 100000

Paid cash dividends of $6,000

assets = liabilities + equity
cash cash + inventory + account receivables + PPE = current liabilities + retained earings + equity
prev balance 205000 + 18000 + 20000 + 135000 = 200000 + 78000 + 100000
-6000 + 0 + 0 + 0 = 0 + -6000 + 0
199000 + 18000 + 20000 + 135000 = 200000 + 72000 + 100000

Prepaid business insurance for the next year in the amount of $5,000

assets = libilities + equity
cash + inventory + account receivables + PPE + prepaid insurance = current liabilities + retained earings + equity
199000 + 18000 + 20000 + 135000 + 0 + 200000 + 72000 + 100000
-5000 + 0 + 0 + 0 + 5000 = 0 + 0 + 0
194000 + 18000 + 20000 + 135000 + 5000 = 200000 + 72000 + 100000

assets=372000 ; liabilities and shareholders equity = 372000

A LOT OF EFFORT HAS BEEN PUT INTO MAKING THIS EASILY UNDERSTANDALE.

INCASE OF DOUBTS GET BACK TO ME.

HOPE THIS WAS HELPFUL.

DO CONSIDER GIVING THIS A THUMBS UP.

ekkarill92 answered 1 year ago
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