Recording a journal Entry and preparing a classified balance sheet. What I have
ID: 2608189 • Letter: R
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Recording a journal Entry and preparing a classified balance sheet. What I have already is correct but I am unsure what I am missing. Thanks!
E2-11 Recording Journal Entries and Preparing a Classified Balance Sheet [LO 2-1, LO 2-3, LO 2-5 Assume Down.com was organized on May 1, to compete with Despair.com-a company that sells de- motivational posters and office products. The following events occurred during the first month of Down.com's operations. a. Received $48,000 cash from the investors who organized Down.com Corporation. b. Borrowed $15,000 cash and signed a note due in two years. c. Ordered equipment costing $16,000. d. Purchased $6,000 in equipment, paying $4,000 in cash and signing a six-month note for the balance e. Received the equipment ordered in (c), paid for half of it, and put the rest on account.Explanation / Answer
BALANCE SHEET ASSETS AMOUNT LIABILITIES AMOUNT FIXED ASSETS CURRENT LIABILITIES AMOUNT Equipment $ 22,000 Account Payable $ 8,000 TOTAL FIXED ASSETS (A) TOTAL CURRENT LIABILITIES CURRENT ASSETS Long Term Debt Cash $ 51,000 Not Payable $ 17,000 TOTAL LIABILITIES (A) $ 25,000 TOTAL CURRENT ASSETS(b) OWNER'S EQUITY Common Stock $ 48,000 Retained Earning TOTAL OWNER'S EQUITY (B) $ 48,000 TOTAL ASSETS (A + B) $ 73,000 TOTAL LIABILITIES AND OWNERS EQUITY (A +B) $ 73,000 Working Notes : Cash = Share Capital = $ 48,000 Issue of Share Capital $ 48,000 Borrowed Cash $ 15,000 Less: Paid in cash for Equipment $ -4,000 Less: Paid in cash half $ -8,000 $ 51,000 Note Account Equipment Account Note = $ 15,000 Equipment Purchase= $ 6,000 Note against plant in $ 6,000 $ 2,000 Equipment Purchase= $ 16,000 $ 17,000 $ 22,000 Account Payable agaisnt Equipment = $ 8,000
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