Explain briefly how each of the following transactions would affect a company's balance sheet. (Remember, assets must equal liabilities plus owners' aquity before and after the transaction)
A. Purchase of a new $10 million building, financed 20 percent with cash and 80 percent with a bank loan.
B. Purchase of a new building for $10 million cash
C. A $10,000 payment to trade creditors
D. Sale of $100,000 of merchandise for cash
E. Sale of $100,000 of merchandise for credit

1. Entry for bank loan:

Bank (Dr.) 8m
Bank Loan (Cr.) 8m

(Increasing asset and liability side by 8m each)

On purchase of asset:

Building (Dr.) 10m
Bank Loan (Cr.) 8m
Cash (Cr.) 2m

So Asset side of bal sheet would increase by 10m and decrease by 8m and 2m.

2. Purchase of new building for cash

Increase asset side for building by 10m and reduces asset side for cash by 10m.

3. 10,000 payment to creditors

Decrease liability side for creditor by 10,000 & decrease 10,000 asset side for cash/bank.

4. Sale of merchandise for cash

Increase asset side for cash by 100,000 & Increase Equity (for sales) by 100,000.

5. Sale of merchandise for credit

Increase asset side for Accounts receivable by 100,000 & Increase Equity (for sales) by 100,000.

Hope this helps.

Offeror.