Question

Ag Bio Tech (ABT) was organized on January 1 by four friends. Each organizer invested $10,000 in the company and, in turn, was issued 8,000 shares of common stock. To date, they are the only stockholders. During the first month (January), the company had the following five events: a. Collected a total of $40,000 from the organizers and, in turn, issued common stock. b. Purchased a building for $65,000, equipment for $16,000, and three acres of land for $18,000; paid $13,000 in cash and signed a note for the balance, which is due to be paid in 15 years. c. One stockholder reported to the company that 500 shares of his ABT stock had been sold and transferred to another stockholder for $5,000 cash. d. Purchased supplies for $3,000 cash. e. Sold one acre of land for $6,000 cash to another company.

Answer 1

Answer:

a. Cash is received of $40,000 which is the stock capital equity part of financial statement.

b. Purchase are made of which notes payable are signed which will increase the non current liability of the company.

c. no effect on financial statements.

d. Cash is paid in turn of supplies.

e. Cash is received by selling partial land.

Explanation:

The effects of transaction on financial statements of company is mentioned above. The transaction c will not have any effect on the company's financial statement. The liability and equity part is increased in the transactions a and b.