Kenneth Chang recently started a business. During the first few days of operatio
ID: 2352472 • Letter: K
Question
Kenneth Chang recently started a business. During the first few days of operation, Mr. Chang transferred $30,000 from his personal account into a business account for a company he named Chang Enterprises. Chang Enterprises borrowed $40,000 from First Bank. Mr. Chang’s father-in-law, Jim Harwood, invested $64,000 into the business for which he received a 25 percent ownership interest. Chang Enterprises purchased a building from Morton Realty Company. The building cost $120,000 cash. Chang Enterprises earned $28,000 in revenue from the company's customers and paid its employees $25,000 for salaries expense.
Required: Mention what happened to the cash accounts of the following entities. Did they INCREASE OR DECREASE.
Explanation / Answer
Mr. Chang (personal account) Decreased by $30,000 (Deposit) Chang Enterprise Increased by $30,000 (Deposit) Increased by $30,000 (Borrowed) Increased by $64,000 (Invested) Decreased by $120,000 (Purchase Building) Increased by $28,000 (Revenue) Decreased by $25,000 (Salaries) First Bank Decreased by $40,000 (Loaned) Jim Harwood Decreased by $64,000 (Invested) Morton Realty Company Increased by $120,000 (Building) Chang Enterprise Customers Decreased by $28,000 (Paid for Services) Chang Enterprise Employees Increased by $25,000 (Salary)
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