Transaction AnalysisGalle Inc. entered into the following transactions during January.Borrowed $50,000 from First Street Bank by signing a note payable.Purchased $25,000 of equipment for cash.Paid $500 to landlord for rent for January.Performed services for customers on account, $10,000.Collected $3,000 from customers for services performed in Transaction d.Paid salaries of $2,500 for the current month.Required:Show the effect of each transaction using the following model. If an amount box does not require an entry, leave the cells blank or enter zero ("0"). Enter decreases in account values as negative numbers. If the effect of a transaction is to increase AND decrease the same item, enter "0" since the net effect on the item is zero. Assets=Liabilities+Stockholders' Equity     ContributedCapital+RetainedEarnings

Question
Asked Aug 23, 2019

Transaction Analysis

Galle Inc. entered into the following transactions during January.

  1. Borrowed $50,000 from First Street Bank by signing a note payable.
  2. Purchased $25,000 of equipment for cash.
  3. Paid $500 to landlord for rent for January.
  4. Performed services for customers on account, $10,000.
  5. Collected $3,000 from customers for services performed in Transaction d.
  6. Paid salaries of $2,500 for the current month.

Required:

Show the effect of each transaction using the following model. If an amount box does not require an entry, leave the cells blank or enter zero ("0"). Enter decreases in account values as negative numbers. If the effect of a transaction is to increase AND decrease the same item, enter "0" since the net effect on the item is zero.

  Assets = Liabilities + Stockholders' Equity
          Contributed
Capital
+ Retained
Earnings
check_circle

Expert Answer

Step 1

The effect of the transaction in the financial statement model.

Financial Statement Model
Incorporation Galle
Transactions
Liabilities
Stockholders Equity
Asset
Office
Expense
s in S
Accounts
Contributed
Revenue
Cash in S+Equipment
Payable in S
capital in S
in S
in $
50,000
1
50,000
0
0
0
+
Balance
50,000
0
50,000
0
0
0
+
-25.000
2
25.000
0
0
C
+
Balance
25,000
25,000
50,000
0
0
0
+
3
500
0
25,000
0
25,000
0
500
+
50,000
500
Balance
24,500
0
0
+
+
4
10,000
0
10,000
+
+
50,000
Balance
34,500
0
10,000
500
3.000
37,500
5
C
0
3,000
0
+
25,000
Balance
50,000
0
13,000
500
+
+
6
-2,500
35,000
0
0
0
0
2,500
3,000
13,000
Balance
25,000
60,000
50,000
0
60,000
+
help_outline

Image Transcriptionclose

Financial Statement Model Incorporation Galle Transactions Liabilities Stockholders Equity Asset Office Expense s in S Accounts Contributed Revenue Cash in S+Equipment Payable in S capital in S in S in $ 50,000 1 50,000 0 0 0 + Balance 50,000 0 50,000 0 0 0 + -25.000 2 25.000 0 0 C + Balance 25,000 25,000 50,000 0 0 0 + 3 500 0 25,000 0 25,000 0 500 + 50,000 500 Balance 24,500 0 0 + + 4 10,000 0 10,000 + + 50,000 Balance 34,500 0 10,000 500 3.000 37,500 5 C 0 3,000 0 + 25,000 Balance 50,000 0 13,000 500 + + 6 -2,500 35,000 0 0 0 0 2,500 3,000 13,000 Balance 25,000 60,000 50,000 0 60,000 +

fullscreen
Step 2

Computation of accoun...

Assets Liabilities Stockholders equity
S60,000=S50,000+S10000
S60,000-S60,000
help_outline

Image Transcriptionclose

Assets Liabilities Stockholders equity S60,000=S50,000+S10000 S60,000-S60,000

fullscreen

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in

Business

Accounting

Related Accounting Q&A

Find answers to questions asked by student like you

Show more Q&A add
question_answer

Q: I attempted this problem and tried to do the company's income statement for on company for december ...

A: Calculate the missing amounts:

question_answer

Q: The following selected transactions occurred for Corner Corporation:  Feb. 1   Purchased 450 shar...

A: Treasury stock:Shares which are purchased back by the company and held in treasury is referred to as...

question_answer

Q: taxation business pass thru entitiesPlease help and show calculation

A: Net investment income is the income that is earned from investment assets such as mutual funds, loan...

question_answer

Q: The Malaysian subsidiary of the PPC distributed and assembled electric motors. It also had limited m...

A: Computation of Investment:Initial Investment = Rs. 67.5 CrAdditional Investment = Rs. 30 Cr @ 10% p....

question_answer

Q: Journalize Transactions Four transactions that occurred during May are listed below. May 5: Borrowe...

A: Journal entry to record the necessary transactions.

question_answer

Q: Late in the year, sofware city began carry WorldCrafter, a new word processing software program. At ...

A: a. 1. Prepare the journal entry to record the write down at December 31.

question_answer

Q: I need help solving this, thanks!

A: Break-even sales: Break-even sales is that level of sales at which there is no profit or no loss on ...

question_answer

Q: The net income of F.F.  Inc., amounted to $1,920.000 for the current year. a. Compute the amount of ...

A: Note: Given net income is “$1,920.000” but it is considered as “$1,920,000”. The reason is, if the n...

question_answer

Q: Blossom Company estimates that 2020 sales will be $40000 in quarter 1, $48000 in quarter 2, and $580...

A: A merchandise purchases budget is a budgetary arrangement that reports the absolute appraisals expen...