Exercise 1-4: Kenneth Chang recently started a business. During the first few days of operation, Mr. Chang transferred $30,000 from his personal account into a business account for a company he named Chang Enterprises. Chang Enterprises borrowed $40,000 from First Bank. Mr. Chang’s father-in-law, Jim Harwood, invested $64,000 into the business for which he received a 25 percent ownership interest. Chang Enterprises purchased a building from Morton Realty Company. The building cost $120,000 cash. Chang Enterprises earned $28,000 in revenue from the company's customers and paid its employees $25,000 for salaries expense.
1. $30,000 from Kenneth Changs personal account – goes into Assets under Cash and in the Statement of cash flows.
2. $40,000 Borrowed from First Bank – goes into Assets under Cash and in the Statement of cash flows.
3. $64,000 from Jim Harwood (father-in-law) He received 25% ownership interest – goes into Assets and Common Stock and then in the Statement of cash flows.