ezt Connect ACCOUNTING nline .1.4: Journal Entries/T-Accounts Questions 4-6 (of
ID: 2391468 • Letter: E
Question
ezt Connect ACCOUNTING nline .1.4: Journal Entries/T-Accounts Questions 4-6 (of 8) The following information applies to the questions displayed below Laser Delivery Services, Inc. (LDS) was Incorporated the year January 1. The following transactions occurred during a. Recelved $40,000 cash from the company's founders in exchange for common stock. b. Purchased land for $15,500, signing a two-year note Ignore Interest). Bought two used delivery trucks at the start of the year at a cost of $12,000 each; pald $5,000 cash and signed a note due in three years for $19,000 (ignore Interest). C. d. Paid $1,500 cash to a truck repair shop for a new motor, which increased the cost of one of the trucks e. Stockholder Jonah Lee paid $350,000 cash for a house for his personal use. value 3.00 points Required: 1. Analyze each item for its effects on the accounting equation of LDS. (Enter any decreases balances with a minus sign.) TIP: The new motor in transaction (d) is treated as an increase to the cost of the truck Stockholders Assets Liabilities Equ Accounts Payable Payable Common Stock Notes Cash EquipmentLand Beg. a. b. 40,000 40,000 15 500Explanation / Answer
Journal entries
Laser Delivery services Inc
Transaction
General Journal
Debit
Credit
a
Cash
$ 40,000.00
Common Stock
$ 40,000.00
(common stock issued to Founders )
b
Land
$ 15,500.00
Notes Payable
$ 15,500.00
(land Purchased against notes payable)
c
Delivery Truck
$ 24,000.00
Cash
$ 5,000.00
Notes Payable
$ 19,000.00
(Delivery truck purchased and partially paid in cash)
d
Delivery truck
$ 1,500.00
Cash
$ 1,500.00
(Capital expenditure done on truck to make it fit for working)
e
No journal Entry in Companies accounts
$ 81,000.00
$ 81,000.00
1)
Effect of each item on the Accounting Equation
Assets =
Liabilities +
Share Holders Equity
Cash
Equipment
Land
Accounts Payable
Notes Payable
Common stock
Beginning
$ -
a
$ 40,000.00
$ 40,000.00
b
$ 15,500.00
$ 15,500.00
c
$ (5,000.00)
$ 24,000.00
$ 19,000.00
d
$ (1,500.00)
$ 1,500.00
e
No effect
Total
$ 33,500.00
$ 25,500.00
$ 15,500.00
$ -
$ 34,500.00
$ 40,000.00
3)
T accounts
Cash
Transaction
Debit
Credit
Balance
Beginning
$ -
$ -
a
$ 40,000.00
$ 40,000.00
c
$ 5,000.00
$ 35,000.00
d
$ 1,500.00
$ 33,500.00
Closing
$ 33,500.00
Land
Transaction
Debit
Credit
Balance
Beginning
$ -
$ -
b
$ 15,500.00
$ 15,500.00
Closing
$ 15,500.00
Common Stock
Transaction
Debit
Credit
Balance
Beginning
$ -
$ -
a
$ 40,000.00
$ 40,000.00
Closing
$ 40,000.00
Equipment
Transaction
Debit
Credit
Balance
Beginning
$ -
$ -
c
$ 24,000.00
$ 24,000.00
d
$ 1,500.00
$ 25,500.00
Closing
$ 25,500.00
Notes Payable
Transaction
Debit
Credit
Balance
Beginning
$ -
$ -
b
$ 15,500.00
$ 15,500.00
c
$ 19,000.00
$ 34,500.00
Closing
$ 34,500.00
Balance sheet
Laser Delivery services Inc
Liabilities
Assets
Current Liabilities
Fixed Assets
Notes Payable
$ 34,500.00
Equipment
$ 25,500.00
Land
$ 15,500.00
Shareholders’ equity
Common stock
$ 40,000.00
Current assets
Cash
$ 33,500.00
Total
$ 74,500.00
$ 74,500.00
Journal entries
Laser Delivery services Inc
Transaction
General Journal
Debit
Credit
a
Cash
$ 40,000.00
Common Stock
$ 40,000.00
(common stock issued to Founders )
b
Land
$ 15,500.00
Notes Payable
$ 15,500.00
(land Purchased against notes payable)
c
Delivery Truck
$ 24,000.00
Cash
$ 5,000.00
Notes Payable
$ 19,000.00
(Delivery truck purchased and partially paid in cash)
d
Delivery truck
$ 1,500.00
Cash
$ 1,500.00
(Capital expenditure done on truck to make it fit for working)
e
No journal Entry in Companies accounts
$ 81,000.00
$ 81,000.00
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