apter 2 HW C O ezto.mheducation.com/hm.tpx Questions 12 -16 (of 22) E2-12 Analyz
ID: 2407479 • Letter: A
Question
apter 2 HW C O ezto.mheducation.com/hm.tpx Questions 12 -16 (of 22) E2-12 Analyzing the Effects of Transactions Using T-Accounts; Preparing and Interpreting a Balance Sheet LO 2-2, LO 2-3, LO 2-4] [The following information applies to the questions displayed below Laser Delivery Services, Inc. (LDS) was incorporated January 1. The following transactions occurred during the year a. Received $45,000 cash from the company's founders in exchange for common stock b. Purchased land for $16,500, signing a two-year note (ignore interest c Bought two used delivery trucks at the start of the year at a cost of $14,000 each paid $2,000 cash signed a note due in three years d. Paid $2.000 cash to a truck repair shop for e. Stockholder Jonah Lee paid $370,000 cash for a house for his personal use. a new motor which increased the cost of one of the trucks References E2-12 Analyzing the Effects of Transactions Using T-Accounts: Preparing and Interpreting e Balance Sheet LO 2-2, LO 2-3, LO 2-4 Section Break value 0.50 pointsExplanation / Answer
1)
Effect of each item on the Accounting Equation
Assets =
Liabilities +
Share Holders Equity
Transactions
Cash
Equipment
Land
Accounts Payable
Notes Payable
Common stock
Beginning
$ -
a
$ 45,000.00
$ 45,000.00
b
$ 16,500.00
$ 16,500.00
c
$ (2,000.00)
$ 28,000.00
$ 26,000.00
d
$ (2,000.00)
$ 2,000.00
e
No effect
2)
Journal entries
Laser Delivery services Inc
Transaction
General Journal
Debit
Credit
a
Cash
$ 45,000.00
Common Stock
$ 45,000.00
(common stock issued to Founders )
b
Land
$ 16,500.00
Notes Payable
$ 16,500.00
(land Purchased against notes payable)
c
Delivery Truck
$ 28,000.00
Cash
$ 2,000.00
Notes Payable
$ 26,000.00
(Delivery truck purchased and partially paid in cash)
d
Delivery truck
$ 2,000.00
Cash
$ 2,000.00
(Capital expenditure done on truck to make it fit for working)
e
No journal Entry in Companies accounts
$ 91,500.00
$ 91,500.00
3)
T accounts
Cash
Transaction
Debit
Credit
Balance
Beginning
$ -
$ -
a
$ 45,000.00
$ 45,000.00
c
$ 2,000.00
$ 43,000.00
d
$ 2,000.00
$ 41,000.00
Closing
$ 41,000.00
Land
Transaction
Debit
Credit
Balance
Beginning
$ -
$ -
b
$ 16,500.00
$ 16,500.00
Closing
$ 16,500.00
Common Stock
Transaction
Debit
Credit
Balance
Beginning
$ -
$ -
a
$ 45,000.00
$ (45,000.00)
Closing
$ (45,000.00)
Equipment
Transaction
Debit
Credit
Balance
Beginning
$ -
$ -
c
$ 28,000.00
$ 28,000.00
d
$ 2,000.00
$ 30,000.00
Closing
$ 30,000.00
Notes Payable
Transaction
Debit
Credit
Balance
Beginning
$ -
$ -
b
$ 16,500.00
$ (16,500.00)
c
$ 26,000.00
$ (42,500.00)
Closing
$ (42,500.00)
4)
Balance sheet
Laser Delivery services Inc
Liabilities
Assets
Current Liabilities
Fixed Assets
Notes Payable
$ 42,500.00
Equipment
30000
Land
16500
Shareholder’s equity
Common stock
45000
Current assets
Cash
41000
Total
$ 87,500.00
87500
5)
Assets of LDS are Primarily financed by
Shareholder's Equity
Shareholders equity is a 51% (Approx) of Total Assets while Current Liabilities are 49% only.
1)
Effect of each item on the Accounting Equation
Assets =
Liabilities +
Share Holders Equity
Transactions
Cash
Equipment
Land
Accounts Payable
Notes Payable
Common stock
Beginning
$ -
a
$ 45,000.00
$ 45,000.00
b
$ 16,500.00
$ 16,500.00
c
$ (2,000.00)
$ 28,000.00
$ 26,000.00
d
$ (2,000.00)
$ 2,000.00
e
No effect
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.