From the course: Financial Accounting Part 1

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Reporting assets and liabilities on the balance sheet

Reporting assets and liabilities on the balance sheet

From the course: Financial Accounting Part 1

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Reporting assets and liabilities on the balance sheet

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- On her first day of business, a busy one. Veda entered into the following arrangements, in addition to the four previously discussed. Number five, she purchased goods for resale in the retail store. Total cost of this retail inventory was $90,000. Veda paid $10,000 cash, and the remainder was put on her credit accounts with suppliers. Transaction number six. She paid $15,000 for a general insurance policy that's good for one year with no further premium payments needed. Now, the impact of each of these events on Veda's balance sheet is illustrated in the growing spreadsheet. I'll give a description of the analysis of each item. For transaction number five, the asset cash is reduced by the $10,000 amount used to pay for the inventory. The asset inventory is increased by $90,000. In addition to reflect the fact that Veda now owes her suppliers $80,000 for the unpaid balance on the inventory, the liability in accounts…

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