Peta Plastics Company has been operating for three years

as #6984
Peta Plastics Company has been operating for three years as a sole proprietorship owned and
managed by James Peta. The December 31, 2009, account balances are:During the year 2010,
the company had the following summarized activities:(a) Purchased equipment that cost
$20,000; paid $5,000 cash and signed a two-year note for th e balance.(b) Received an
additional $20,000 cash investment from James Peta.(c) Borrowed $30,000 cash from a local
bank, payable June 30, 2015.(d) Purchased $4,000 of additional supplies on account.(e) Built
an addition to the factory for $41,000; paid $12,000 in cash and signed a three-year note for the
balance.(f) Hired a new employee to start January 1, 2011, at an annual salary of
$35,000.Required:1. Analyze transactions (a)-(f) to determine their effects on the accounting
equation. Use the format shown in the demonstration case on page 71.2. Record the
transaction effects determined in requirement 1 using a journal entry format.3. Summarize the
journal entry effects from requirement 2 using T-accounts.4. Explain your response to event
(f).5. Prepare a classified balance sheet at December 31, 2010.6. As of December 31, 2010,
has the financing for Peta Plastics Company's assets primarily come from liabilities or owner's
equity?View Solution:
Peta Plastics Company has been operating for three years as

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