Reference no: EM132406489

Question

During Year 14, Inheritance Brands engaged five transactions applying U.S. GAAP and results in millions of U.S. dollars ($).

(1) The firm issues 10 million shares of $3.125 par value common stock for $55 cash per share.

(2) At the end of Year 14, the firm acquires land costing $250 million and a building costing $900 million. It pays for the purchase by giving $400 million in cash and promising to pay the remainder in Year 15. It signed a note payable for the remainder.

(3) The firm pays $30 million cash for a one-year insurance policy on the land and building. The policy period begins at the start of Year 15.

(4) The firm acquires merchandise inventory costing $400 million on account from various suppliers.

(5) The firm pays cash to the suppliers in transaction (4) for its purchases on account.

a. What is impact of the five transactions on the balance sheet using this

Transaction Assets = Liabilities + Shareholders' Equity

(1) +$550 $0 +$550

Subtotal $550 = $0 + $550.

b. What journal entries for each of the five transactions

b. Give the journal entries for each of the five transactions.