Susan Engel established Boston Bed Breakfast as a sole

#6987
Susan Engel established Boston Bed & Breakfast as a sole proprietorship on July 1, 2009. The
company's chart of accounts included the following:Accounts Payable .......................... Notes
PayableBuilding ..................................... S. Engel, CapitalCash ..........................................
SuppliesEquipmentDuring the month of July, the company had the following activities:(a)
Received $160,000 cash from Susan Engel.(b) Purchased a large existing bed and breakfast
for $900,000; paid $90,000 as a down payment and signed a note payable from a local bank for
the rest. The note is due on June 30, 2029.(c) Purchased new kitchen appliances for $16,000
cash.(d) Purchased supplies for $9,000 on account.(e) Returned a defective appliance
purchased in (c) for $3,000 and received a cash refund.Required:1. Analyze transactions (a)-(e)
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. Prepare a classified balance sheet at July 31, 2009.5. As of July 31, 2009, has the
financing for Boston Bed & Breakfast's assets primarily come from liabilities or owner's
equity?View Solution:
Susan Engel established Boston Bed Breakfast as a sole

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