Reference no: EM132406476
Question
Dual effects of transactions on balance sheet equation and journal entries. Assume that during Year 15, Bullseye Corporation, a U.S. retailer, engages in the following six transac- tions. Bullseye Corporation applies U.S. GAAP and reports its results in millions of U.S. dollars ($). Do not be concerned that after these transactions, the balance in the Cash account is negative. The firm will deal with that issue in transactions not shown here.
(1) The firm issues 20 million shares of $0.0833 par value common stock for a total of $960 million cash. (2) It purchases merchandise costing $1,500 million on account. (3) The firm acquires a new store location, consisting of a building costing $3,200 million and land costing $930 million. It pays cash to the owner of the property. (4) The firm purchases fixtures for the new store costing $860 million, on account. (5) The firm pays the merchandise supplier in transaction (2) the amount due. (6) The firm pays the supplier of the fixtures in transaction (4) half of the amount due in cash. The firm pays the other half by issuing 8.6 million common shares to the supplier. At the time of this transaction, Bullseye Corporation's shares traded at $50 per share in the market.
A. Indicate the effects of these six transactions on the balance sheet equation using this format:
Transaction Number Assets = Liabilities + Shareholders' Equity
(1) +$960 $0 +$960
Subtotal $960 = $0 + +$960
B. Give the journal entries for each of the six transaction
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