Assume Down, Incorporated, was organized on May 1 to compete with Despair, Incorporated-a company that sells de- motivational posters and office products. Down, Incorporated, encountered the following events during its first month of operations. a. Received $48,000 cash from the investors who organized Down, Incorporated 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. 3. Prepare a classified balance sheet at May 31. Include Retained Earnings with a balance of zero. DOWN.INCORPORATED Balance Sheet At May 31 0

Assume Down, Incorporated, was organized on May 1 to compete with Despair, Incorporated-a company that sells de- motivational posters and office products. Down, Incorporated, encountered the following events during its first month of operations. a. Received $48,000 cash from the investors who organized Down, Incorporated 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. 3. Prepare a classified balance sheet at May 31. Include Retained Earnings with a balance of zero. DOWN.INCORPORATED Balance Sheet At May 31 0

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter3: Analyzing And Recording Transactions

Section: Chapter Questions

Problem 16EA: Discuss how each of the following transactions for Watson, International, will affect assets,...

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In July of this year, M. Wallace established a business called Wallace Realty. The account headings are presented below. Transactions completed during the month follow. a. Wallace deposited 24,000 in a bank account in the name of the business. b. Paid the office rent for the current month, 650, Ck. No. 1000. c. Bought office supplies for cash, 375, Ck. No. 1001. d. Bought office equipment on account from Dellos Computers, 6,300. e. Received a bill from the City Crier for advertising, 455. f. Sold services for cash, 3,944. g. Paid on account to Dellos Computers, 1,500, Ck. No. 1002. h. Received and paid the bill for utilities, 340, Ck. No. 1003. i. Paid on account to the City Crier, 455, Ck. No. 1004. j. Paid truck expenses, 435, Ck. No. 1005. k. Wallace withdrew cash for personal use, 1,500, Ck. No. 1006. Required 1. Record the transactions and the balance after each transaction. 2. Total the left side of the accounting equation (left side of the equal sign), then total the right side of the accounting equation (right side of the equal sign). If the two totals are not equal, check the addition and subtraction. If you still cannot find the error, re-analyze each transaction.
The following information is provided for the first month of operations for Legal Services Inc.: A. The business was started by selling $100,000 worth of common stock. B. Six months rent was paid in advance, $4,500. C. Provided services in the amount of $1,000. The customer will pay at a later date. D. An office worker was hired. The worker will be paid $275 per week. E. Received $500 in payment from the customer in C. F. Purchased $250 worth of supplies on credit. G. Received the electricity bill. We will pay the $110 in thirty days. H. Paid the worker hired in D for one weeks work. I. Received $100 from a customer for services we will provide next week. J. Dividends in the amount of $1,500 were distributed. Prepare the necessary journal entries to record these transactions. If an entry is not required for any of these transactions, state this and explain why.
Transaction Analysis and Financial Statements Just Rolling Along Inc. was organized on May 1 by two college students who recognized an opportunity to make money while spending their days at a beach along Lake Michigan. The two entrepreneurs plan to rent bicycles and in-line skates to weekend visitors to the lakefront. The following transactions occurred during the first month of operations: May 1: Received contribution of $9,000 from each of the two principal owners of the new business in exchange for shares of stock. May 1: Purchased ten bicycles for $300 each on an open account. The company has 30 days to pay for the bicycles. May 5: Registered as a vendor with the city and paid the $15 monthly fee. May 9: Purchased 20 pairs of in-line skates at $125 per pair, 20 helmets at $50 each, and 20 sets of protective gear (knee and elbow pads and wrist guards) at $45 per set for cash. May 10: Purchased $100 in miscellaneous supplies on account. The company has 30 days to pay for the supplies. May 15: Paid $125 bill from local radio station for advertising for the last two weeks of May. May 17: Customers rented in-line skates and bicycles for cash of $1,800. May 24: Billed the local park district $1,200 for in-line skating lessons provided to neighborhood children. The park district is to pay one-half of the bill within five working days and the rest within 30 days. May 29: Received 50% of the amount billed to the park district. May 30: Customers rented in-line skates and bicycles for cash of $3,000. May 30: Paid wages of $160 to a friend who helped over the weekend. May 31: Paid the balance due on the bicycles. Required Prepare a table to summarize the preceding transactions as they affect the accounting equation. Use the format in Exhibit 3-1. Identify each transaction with the date. Prepare an income statement for the month of May. Prepare a classified balance sheet at May 31. Why do you think the two college students decided to incorporate their business rather than operate it as a partnership?
Discuss how each of the following transactions for Watson, International, will affect assets, liabilities, and stockholders equity, and prove the companys accounts will still be in balance. A. An investor invests an additional $25,000 into a company receiving stock in exchange. B. Services are performed for customers for a total of $4,500. Sixty percent was paid in cash, and the remaining customers asked to be billed. C. An electric bill was received for $35. Payment is due in thirty days. D. Part-time workers earned $750 and were paid. E. The electric bill in C is paid.
ORGANIZATION COSTS BB Electric decided to incorporate and has incurred the following costs of organizing: Incorporation fees 400 Attorneys fees 4,800 Promotion expenses 5,700 Prepare the entry for the payment of these organization costs for cash on January 31.
Assume Down, Incorporated, was organized on May 1 to compete with Despair, Incorporated—a company that sells de-motivational posters and office products. Down, Incorporated, encountered the following events during its first month of operations. Received $34,000 cash from the investors who organized Down, Incorporated Borrowed $19,000 cash and signed a note due in two years. Ordered equipment costing $16,000. Purchased $10,000 in equipment, paying $2,000 in cash and signing a six-month note for the balance. Received the equipment ordered in (c), paid for half of it, and put the rest on account. Prepare a classified balance sheet at May 31. Include Retained Earnings with a balance of zero.
The following are the transactions relating to the formation of Gray Mowing Services Inc. and its first month of operations. A. The firm was organized and the initial stockholders invested cash of $12,000. B. The company borrowed $18,000 from a relative of one of the initial stockholders; a short-term note was signed. C. Two zero-turn lawn mowers costing $7,600 each and a professional trimmer costing $2,600 were purchased for cash. The original list price of each mower was $10,200, but a discount was received because the seller was having a sale. D. Gasoline, oil, and several packages of trash bags were purchased for cash of $1,800. E. Advertising flyers announcing the formation of the business and a newspaper ad were purchased. The cost of these items, $3,400, will be paid in 30 days. F. During the first two weeks of operations, 94 lawns were mowed. The total revenue for this work was $14,100; $9,300 was collected in cash, and the balance will be received within 30 days. G. Employees…
Doug Allen has decided to go into the insect extermination business and to operate as Doug's Extermination Service. The following transactions were completed during the first month of operations, May, 20--. 1. Doug invested $35,000 cash in the business. 2. Purchased extermination equipment for $17,000 in cash. 3. Paid $700 rent for garage and office quarters. 4. Purchased chemicals (expense) for $1,100 from Low Glow Chem Co. on account. 5. Received $1,600 revenue for extermination service. 6. Paid telephone bill, $120 7. Paid assistant's salary, $700. 8. Earned $980 revenue for extermination service, on account. 9. Paid electric bill, $230. 10. Paid for truck repairs (expense), $145. 11. Paid $600 to Low Glow Chem Co., on account. 12. Paid $131 for gas and oil for truck (expense). 13. Received $1,400 revenue for extermination service. 14. Received $500 for services previously earned on account in transaction (8). 15. Paid assistant's salary, $900.…
Mulkeen Service Company, Incorporated, was incorporated by Conor Mulkeen and five other managers. The following activities occurred during the year: Received $78,000 cash from the managers; each was issued 2,200 shares of common stock. Purchased equipment for use in the business at a cost of $17,400; one-fourth was paid in cash and the company signed a note for the balance (due in six months). Signed an agreement with a cleaning service to pay it $145 per week for cleaning the corporate offices, beginning next year. Conor Mulkeen borrowed $30,000 for personal use from a local bank, signing a one-year note. Required: For each of the above transactions, record its effects in the appropriate T-accounts. Assume all beginning balances are zero. Please dont provide solution in image format thnks
Healthy Bites, is an incorporated organic packaged food start-up located in Gowanus, Brooklyn During the first month of operations of the business, the following events and transactions occurred. 1 A venture capital firm invested $39,000 cash in exchange for common stock. 2 Healthy Bites hired a marketing director at a salary of $1,800 per month. 3 Purchased $1,500 of organic food supplies on account from Keith’s Farm. 7 Paid warehouse rent of $1,200 for the month. 11 Sold 15 cases of Healthy Bites product and Joe’s Bar $1,700 for product sold. 12 Received $5,000 advance on products to be delivered at a later date. 17 Received cash of $1,500 for product sold to The Ale House. 31 Paid marketing director $1,800 salary for the month. 31 Paid 35% of balance due Keith’s Farm. The company uses the following chart of accounts: No. 101 Cash, No. 112 Accounts Receivable, No. 126 Food Supplies, No. 201 Accounts Payable, No. 205 Unearned Revenue, No. 311 Common Stock, No. 400 Sales Revenue, No.…
Healthy Bites, is an incorporated organic packaged food start-up located in Gowanus, Brooklyn During the first month of operations of the business, the following events and transactions occurred. 1 A venture capital firm invested $39,000 cash in exchange for common stock. 2 Healthy Bites hired a marketing director at a salary of $1,800 per month. 3 Purchased $1,500 of organic food supplies on account from Keith’s Farm. 7 Paid warehouse rent of $1,200 for the month. 11 Sold 15 cases of Healthy Bites product and Joe’s Bar $1,700 for product sold. 12 Received $5,000 advance on products to be delivered at a later date. 17 Received cash of $1,500 for product sold to The Ale House. 31 Paid marketing director $1,800 salary for the month. 31 Paid 35% of balance due Keith’s Farm. The company uses the following chart of accounts: No. 101 Cash, No. 112 Accounts Receivable, No. 126 Food Supplies, No. 201 Accounts Payable, No. 205 Unearned Revenue, No. 311 Common Stock, No. 400…
Grady Service Company Inc. was organized by Chris Grady and five other investors. The following events occurred during the year: a. Received $68,400 cash from the investors; each was issued 1,520 shares. b. Purchased equipment for use in the business at a cost of $18,400; one-fourth was paid in cash, and the company signed a note for the balance, payable in six months. c. Signed an agreement with a cleaning service to pay it $320 per week for cleaning the corporate offices. d. Lent $3,700 to one of the investors, who signed a note due in six months. e. Issued shares to additional investors, who contributed $7,200 in cash and a lot of land valued at $16,200. f. Paid the amount of the note payable in (b). g. Conor Mulkeen borrowed $11,200 for personal use from a local bank and signed a note payable in one year. Required: 1. Prepare journal entries for each transaction. (If no entry is required for a transaction/event, select "No journal…