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    Impact of Transactions on T-Accounts

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    During the year 2015, the company had the following summarized activities:

    a. Purchased short-term investments for $10,000 cash.
    b. Lent $5,000 to a supplier who signed a two-year note.
    c. Purchased equipment that cost $18,000; paid $5,000 cash and signed a one-year note for the balance.
    d. Hired a new president at the end of the year. The contract was for $85,000 per year plus options to purchase company stock at a set price based on company performance.
    e. Issued an additional 2,000 shares of $0.50 par value common stock for $11,000 cash.
    f. Borrowed $9,000 cash from a local bank, payable in three months.
    g. Purchased a patent (an intangible asset) for $3,000 cash.
    h. Built an addition to the factory for $24,000; paid $8,000 in cash and signed a three-year note for the balance.
    i. Returned defective equipment to the manufacturer, receiving a cash refund of $1,000.

    1. & 2. Record each necessary entry for the events in 2015 in T-accounts (including referencing) and determine the ending balances. The balances at the end of
    2014 have been entered as beginning balances for 2015.

    See attachment for full problem and data.

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    Solution Summary

    Determines the impact of transactions on T-Accounts, given a company's yearly activities. Attached in Excel.