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Accounting: Making Sound Decisions: Prof. Marc Badia

Cristina incorporated the Campus Bookstore with her uncle contributing €50,000 in capital. On December 31st, the bookstore received a €20,000 three-year bank loan, purchased €25,000 of furniture and equipment with €15,000 paid upfront, acquired a €3,000 software, and prepaid €6,000 for its annual rent. It also purchased €40,000 of books on credit.

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Yash Dhanuka
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40 views1 page

Accounting: Making Sound Decisions: Prof. Marc Badia

Cristina incorporated the Campus Bookstore with her uncle contributing €50,000 in capital. On December 31st, the bookstore received a €20,000 three-year bank loan, purchased €25,000 of furniture and equipment with €15,000 paid upfront, acquired a €3,000 software, and prepaid €6,000 for its annual rent. It also purchased €40,000 of books on credit.

Uploaded by

Yash Dhanuka
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Accounting: Making Sound Decisions

Prof. Marc Badia

Week 1: “Introduction to Accounting: The Balance Sheet”

Transactions for the preoperational period x0:

1. On December 1st, Cristina incorporates the Campus Bookstore and together with her
uncle, they contribute €50,000 of capital to the business.
2. Cristina negotiates a loan with the bank. On December 31st, the Campus Bookstore
receives a three-year bank loan of €20,000. The full amount of the principal has to be
repaid at the end of the third year.
3. On December 31st, the Campus Bookstore purchases furniture and equipment for
€25,000 (€15,000 paid in cash and the rest to be paid in the coming year).
4. On December 31st, the Campus Bookstore acquires a bookstore management
software for €3,000 paid in cash.
5. On December 15th, the Campus Bookstore purchases books on credit for a total
amount of €40,000.
6. On December 31st, Cristina signs a one-year lease for the premises of the Campus
Bookstore. The lease will start on January 1st and will end on December 31st of year
x1. The Campus Bookstore prepays €6,000 for the full year rent.

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