Help with part 2 Swish Watch Corporation manufactures, sells, and services expen
ID: 2400050 • Letter: H
Question
Help with part 2 Swish Watch Corporation manufactures, sells, and services expensive watches. The company has been in business for three years. At the end of the previous year, the accounting records reported total assets of $2,345,000 and total liabilities of $1,870,000. During the current year, the following s occurred events a. Issued additional shares of common stock for $199,000 cash. b. Borrowed $231,000 cash from the bank and signed a 10-year note. c. A stockholder sold $6,000 of his stock in Swish Watch Corporation to another investor Built an addition on the factory buildings for $290,000 and paid cash to the contractor Purchased equipment for the new addition for $53,000, paying $16,500 in cash and signing a six-month note for the balance. Returned a $4,900 piece of equipment, from (e), because it proved to be defective; received a cash refund d. e. f. Required: 1. Complete the spreadsheet that follows, using plus (+) for increases and minus () for decreases for each account. The first transaction is used as an example. (Enter any decreases to account balances with a minus sign.) Equity Notes Common Retained Cash Equipment Buildings 0 0 Beg 199,000 199,000 231,000 231,000 290,000 (290,000) (16,500) 4,900 36,500 53,000 (4,900) 8 100 199,000 290,000 267,500Explanation / Answer
Answers
Already solved by you:
Cash
Equipment
Buildings
Notes Payable
Common Stock
Retained earnings
Beg
a
$ 1,99,000.00
$ 1,99,000.00
b
$ 2,31,000.00
$ 2,31,000.00
c
d
$ (2,90,000.00)
$ 2,90,000.00
e
$ (16,500.00)
$ 53,000.00
$ 36,500.00
f
$ 4,900.00
$ (4,900.00)
Total of transaction during the year
$ 1,28,400.00
$ 48,100.00
$ 2,90,000.00
$ 2,67,500.00
$ 1,99,000.00
$ -
Working:
Total Assets in the beginning
$ 23,45,000.00
Total Liabilities at the beginning
$ (18,70,000.00)
Total Stockholder's Equity at the beginning
$ 4,75,000.00
Total Assets in the beginning (given in question)
$ 23,45,000.00
Add: Cash
$ 1,28,400.00
Add: Equipment
$ 48,100.00
Add: Buildings
$ 2,90,000.00
Total Assets at the year end
$ 28,11,500.00
Total Liabilities in the beginning (given in question)
$ 18,70,000.00
Add: Notes payable
$ 2,67,500.00
Total Liabilities at the year end
$ 21,37,500.00
Total Stockholder's Equity at the beginning
$ 4,75,000.00
Add: Common Stock
$ 1,99,000.00
Add: retained earnings
$ -
Total Stockholder's Equity at the end
$ 6,74,000.00
Answer, as asked
a
Total Assets at the end of Year
$ 28,11,500.00
b
Total Liabilities at the end of year
$ 21,37,500.00
c
Total Stockholder's Equity at the end of year
$ 6,74,000.00
---Since Liabilities are more than Total Stockholder’s Equity, it can be said that the amount invested in ASSETS primarily comes from LIABILITIES.
Hence, answer = Liabilities
Cash
Equipment
Buildings
Notes Payable
Common Stock
Retained earnings
Beg
a
$ 1,99,000.00
$ 1,99,000.00
b
$ 2,31,000.00
$ 2,31,000.00
c
d
$ (2,90,000.00)
$ 2,90,000.00
e
$ (16,500.00)
$ 53,000.00
$ 36,500.00
f
$ 4,900.00
$ (4,900.00)
Total of transaction during the year
$ 1,28,400.00
$ 48,100.00
$ 2,90,000.00
$ 2,67,500.00
$ 1,99,000.00
$ -
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