Question

A company receives receives $100,000 cash from investors in exchange for stock. Several weeks later, the company buys $250,000 machine using all of the cash from the stock issue and signing a promissory note for the remainder. The accounts involved in these two transactions are_____________

Answer 1

The accounts involved are Cash, Common Stock, Machinery, and Notes Payable, reflecting the transactions of receiving cash for stock and purchasing machinery with both cash and a note.

Step-by-step explanation:

The accounts involved in the two transactions described are: Cash, Common Stock, Machinery, and Notes Payable. In the first transaction, when the company receives $100,000 cash from investors in exchange for stock, it would debit Cash and credit Common Stock to represent the inflow of cash and the issuance of stock respectively. In the second transaction, to purchase a $250,000 machine, the company would debit Machinery for the full amount of the machine's cost and credit Cash for the amount on hand ($100,000), then credit Notes Payable for the remainder of the purchase price (additional $150,000).