During the month,a company enters into the following transactions:
- Borrows $3,200 of cash from the bank by signing a formal agreement to repay the loan in 2 years.
- Buys $4,000 of new equipment on account.
- Pays off $2,400 of accounts payable.
- Pays off $1,200 of notes payable
Required:
Part a.Show the effect of these transactions on the basic accounting equation.
Part b.Prepare the journal entries that would be used to record the transactions.
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-Equipment
A)Current Assets
B)Tangible Assets
C)Investments
D)Intangibles
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G)Long-Term Liability
H)Capital Stock
I)Retained Earnings
J)Item
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