The following events occurred for Johnson Company:

(a) Received investment of cash by organizers and distributed to them 1,080 shares of $1 par value common stock with a market price of $10 per share.
(b) Purchased $7,900 of equipment, paying $1,100 in cash and owing the rest on accounts payable to the manufacturer. Borrowed $13,000 cash from a bank.
(c) Loaned $500 to an employee who signed a note. Purchased $20,437 of land; paid $8,000 in cash and signed a mortgage note for the balance.

Required:

For each of the events (a) through (e), perform transaction analysis and indicate the account, amount, and direction of the effect (increase or decrease) on the accounting equation.

Accounting Equation

           Assets           =         Equity         +         Liabilities

(a)    Cash +10,080  Common Shares 10,080  NE

(b)    Equipment + 7,900         NE              Account Payable + 6,800

       Cash - 1,100

       Cash +13,000                                     Bank loan +13,000

(c)    Cash -500                        NE             Mortgage Payable +12,437

       Receivable +500

       Land +20,437

       Cash -8,000

Total      42,317                     10,080                     32,237

see explanation below for a walk through to the answer.

Explanation:

(a) Received investment of cash by organizers and distributed to them 1,080 shares of $1 par value common stock with a market price of $10 per share.

(b) Purchased $7,900 of equipment, paying $1,100 in cash and owing the rest on accounts payable to the manufacturer. Borrowed $13,000 cash from a bank.

(c) Loaned $500 to an employee who signed a note. Purchased $20,437 of land; paid $8,000 in cash and signed a mortgage note for the balance.

Required:

Assets         =Liabilities  +Stockholders’ Equity  

a.Cash10800                  Common Stock1080

                           Additional paid in capital                                  

                                                9720

b.Equipment7,900   Notes Payable6,800    

Cash-1100      

c.Cash13,000  Notes Payable13,000    

d.Note receivable500      

Cash-500      

e.Land20,437  Mortgage Notes Payable12,437    

Cash-8,000      

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