From the course: Financial Accounting Part 1

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Impact of events on assets and liabilities

Impact of events on assets and liabilities

From the course: Financial Accounting Part 1

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Impact of events on assets and liabilities

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- On her first day of business, Veda entered into the following arrangements in addition to the two previously discussed. Transaction number three, purchased a warehouse complex with an outdoor storage yard, large shed for storing equipment, and an attached building that can be used for offices and retail sales. The cost of the complex was $450,000, $50,000 of which was for the land itself. Veda paid $100,000 down in cash, and the remaining $350,000 is financed with a mortgage. The interest rate on the mortgage is 8%. Interest on the mortgage is payable each year on January 1st. The principle is to be paid in a balloon payment in seven years. Transaction number four, purchased various pieces of equipment for $650,000 cash. Now, the impact of each of these events on Veda's balance sheet is illustrated here in this spreadsheet. I'll give a description of the analysis of each item. Transaction number three, quite a…

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