11.   Dual effects of transactions on balance sheet equation and journal entries. Assume that dur- ing Year 14, Inheritance Brands, a U.S. manufacturer and distributor, engaged in the fol- lowing five transactions. Inheritance Brands applies U.S. GAAP and reports its results in millions of U.S. dollars ($). You may round to one significant digit after the decimal point.

(1)    The firm issues 10 million shares of $3.125 par value common stock for $55 cash per share.

(2)    At the end of Year 14, the firm acquires land costing $250 million and a building cost- ing $900 million. It pays for the purchase by giving $400 million in cash and promising to pay the remainder in Year 15. It signed a note payable for the remainder.

(3)    The firm pays $30 million cash for a one-year insurance policy on the land and build- ing. The policy period begins at the start of Year 15.

(4)    The firm acquires merchandise inventory costing $400 million on account from various suppliers.

(5)    The firm pays cash to the suppliers in transaction (4) for its purchases on account.

a.   Indicate the effects of these five transactions on the balance sheet equation using this format:

 

Transaction Number	Assets	=	Liabilities	+	Shareholders’  Equity
(1)	+$550	Â	$0	Â	+$550
Subtotal	$550	=	$0	+	$550

b.   Give the journal entries for each of the five transactions.