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22108 Accounting and Accountability - Spring 2025 2. PRACTICE Final Exam - 22108 - Spring 2022
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Hangry Donuts head baker is Jacqueline. She recommends that HD requires a larger oven and proposes that the owners take out a loan for $18,000 to purchase the new oven. The owners agree and a new oven is purchased. The bank pays the oven supplier directly for the equipment and begins the loan for HD. Select the flows and accounts that the business would use to record this transaction. Please choose a drop-down selection for every box. Assets = Liabilities + Equity [ Select ] [ Select ] [ Select ] [ Select ] [ Select ] [ Select ]
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Step-by-Step Analysis
Let’s walk through how to record this transaction step by step, considering what happened and what accounts are affected.
First, identify the event: HD purchases a new oven (an asset) using a loan from the bank, and the bank pays the supplier directly. This means the company acquires a fixed asset and incurs a liability, with no immediate impact on cash reported in the company’s books since the bank disbursed funds directly to the supplier.
Now evaluate the asset sid......Login to view full explanationLog in for full answers
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