Indicate whether each of the following types of transactions will either decrease owner’s equity:

1. owner’s investments
2. revenues
3. expenses
4. owner’s withdrawals

Is it true that a transaction always affects at least two elements (Assets, Liabilities, or Stockholders’ Equity) of the accounting equation? Explain.

Assume that the seller owes $\$ 80,000$ on a loan for the land. After receiving the $\$ 298,000$ cash in (a), the seller pays the $\$ 80,000$ owed. What is the effect of the payment on the total amount of the seller's (1) assets, (2) liabilities, and (3) owner's equity?

A vacant lot acquired for $\$ 115,000$ is sold for $\$ 298,000$ in cash. What is the effect of the sale on the total amount of the seller's (1) assets, (2) liabilities, and (3) owner's equity?

Ozark Sports sells hunting and fishing equipment and provides guided hunting and fishing trips. Ozark Sports is owned and operated by Eric Griffith, a well-known sports enthusiast and hunter. Eric’s wife, Linda, owns and operates Lake Boutique, a women’s clothing store. Eric and Linda have established a trust fund to finance their children’s college education. The trust fund is maintained by Missouri State Bank in the name of the children, Mark and Steffy.

a. For each of the following transactions, identify which of the entities listed should record the transaction in its records.

1. Linda authorized the trust fund to purchase mutual fund shares.
2. Linda purchased two dozen spring dresses from a St. Louis designer for a special spring sale.
3. Eric paid a breeder’s fee for an English springer spaniel to be used as a hunting guide dog.
4. Linda deposited a $2,000 personal check in the trust fund at Missouri State Bank.
5. Eric paid a local doctor for his annual physical, which was required by the workmen’s compensation insurance policy carried by Ozark Sports.
6. Eric received a cash advance from customers for a guided hunting trip.
7. Linda paid her dues to the YWCA.
8. Linda donated several dresses from inventory for a local charity auction for the benefit of a women’s abuse shelter.
9. Eric paid for dinner and a movie to celebrate their twelfth wedding anniversary.
10. Eric paid for an advertisement in a hunters’ magazine.

Big Sky Sports sells hunting and fishing equipment and provides guided hunting and fishing trips. Big Sky Sports is owned and operated by Joe Flannery, a well-known sports enthusiast and hunter. Joe's wife, Pam, owns and operates Glacier Boutique, a women's clothing store. Joe and Pam have established a trust fund to finance their children's college education. The trust fund is maintained by Kalispell State Bank in the name of the children, Trey and Brooke.

a. For each of the following transactions, identify which of the entities listed should record the transaction in its records:

$$\begin{aligned} &\text { Entities }\\ &\begin{array}{ll} \hline \text { G } & \text { Glacier Boutique } \\ \text { K } & \text { Kalispell State Bank } \\ \text { B } & \text { Big Sky Sports } \\ \text { X } & \text { None of the above } \end{array} \end{aligned}$$

1. Pam deposited a $\$ 2,000$ personal check in the trust fund at Kalispell State Bank.
2. Pam purchased two dozen spring dresses from a Spokane designer for a special spring sale.
3. Joe paid a breeder's fee for an English Springer Spaniel to be used as a hunting guide dog.
4. Pam authorized the trust fund to purchase mutual fund shares.
5. Joe paid a local doctor for his annual physical, which was required by the workmen's compensation insurance policy carried by Big Sky Sports.
6. Received a cash advance from customers for a guided hunting trip.
7. Pam paid her dues to the YWCA.
8. Pam donated several dresses from inventory for a local charity auction for the benefit of a women's abuse shelter.
9. Joe paid for dinner and a movie to celebrate their thirtieth wedding anniversary.
10. Joe paid for an advertisement in a hunters' magazine.

b. What is a business transaction?

A vacant lot acquired for $115,000 is sold for$298,000 in cash. What is the effect of the sale on the total amount of the seller’s (1) assets, (2) liabilities, and (3) stockholders’ equity?

Determine the missing amount for each of the following:

$$\begin{array}{lccc} &\textbf{Assets}&=&\textbf{Liabilities}&+&\textbf{Owner's Equity}\\ \hline \text{a.}&\text{x}&=&\$150,000&+&\$450,000\\ \text{b.}&\$275,000&=&\text{x}&=&50,000\\ \text{c.}&615,000&=&190,000&+&\text{x}\\ \end{array}$$

Indicate whether each of the following is identified with (1) an asset, (2) a liability, or (3) owner’s equity: a. cash

A vacant lot acquired for $115,000 is sold for$298,000 in cash. What is the effect of the sale on the total amount of the seller’s (1) assets, (2) liabilities, and (3) stockholders’ equity?

Assume that the seller owes $80,000 on a loan for the land. After receiving the$298,000 cash, the seller pays the $80,000 owed. What is the effect of the payment on the total amount of the seller’s (1) assets, (2) liabilities, and (3) stockholders’ equity?

a. A vacant lot acquired for $115,000 is sold for$298,000 in cash. What is the effect of the sale on the total amount of the seller's (1) assets, (2) liabilities, and (3) owner's equity?

b. Assume that a seller owes $\$ 80,000$ on a loan for a land. After receiving $\$298,000$ cash for the land sold which was acquired for $\$115,000$, the seller pays the $\$ 80,000$ owed. What is the effect of the payment on the total amount of the seller's (1) assets, (2) liabilities, and (3) owner's equity?

c. Is it true that a transaction always affects at least two elements (Assets, Liabilities, or Owner's Equity) of the accounting equation? Explain.

M&M and Taxes $\color{#c34632}\text{[Lo2]}$ In previous Problem, what is the cost of equity after recapitalization? What is the WACC? What are the implications for the firm's capital structure decision?

Determine the financial statement on which the item below appears. Use I for income statement. E for statement of owner's equity, and B for balance sheet.
 Depreciation Expense

Ozark Sports sells hunting and fishing equipment and provides guided hunting and fishing trips. Ozark Sports is owned and operated by Eric Griffith, a well-known sports enthusiast and hunter. Eric’s wife, Linda, owns and operates Lake Boutique, a women’s clothing store. Eric and Linda have established a trust fund to finance their children’s college education. The trust fund is maintained by Missouri State Bank in the name of the children, Mark and Steffy.

a. For each of the following transactions, identify which of the entities listed should record the transaction in its records.

1. Linda authorized the trust fund to purchase mutual fund shares.
2. Linda purchased two dozen spring dresses from a St. Louis designer for a special spring sale.
3. Eric paid a breeder’s fee for an English springer spaniel to be used as a hunting guide dog.
4. Linda deposited a $2,000 personal check in the trust fund at Missouri State Bank.
5. Eric paid a local doctor for his annual physical, which was required by the workmen’s compensation insurance policy carried by Ozark Sports.
6. Eric received a cash advance from customers for a guided hunting trip.
7. Linda paid her dues to the YWCA.
8. Linda donated several dresses from inventory for a local charity auction for the benefit of a women’s abuse shelter.
9. Eric paid for dinner and a movie to celebrate their twelfth wedding anniversary. 10.Eric paid for an advertisement in a hunters’ magazine.