Discuss the effect of debt and equity transactions on a company's financial accounts and statements.
To discuss the effects, let us assume that the amount going to borrow from creditor or equity is $100
(1) let us first discuss the transactions on financial accounts.
Debt Financing: The company borrows $100 from the public by issuing long-term 5% notes/bonds. The journal entries are
Debit: Cash $100
Credit: Note Payable $100
Equity Financing: The company issues 50 shares of common stocks (par value $1.5) to ...
The effect of debt and equity transactions on a company's financial accounts and statements are analyzed.