E2-10 Analyzing the Effects of Transactions in T-Accounts LO2-4 Precision Builde
ID: 2334379 • Letter: E
Question
E2-10 Analyzing the Effects of Transactions in T-Accounts LO2-4 Precision Builders Construction Company was incorporated by Chris Stoschek. The following activities occurred during the year: Received from three investors $58,000 cash and land valued at $33,000; each investor was issued 1,000 shares of common stock with a par value of $0.10 per share. Purchased construction equipment for use in the business at a cost of $53,000; one-fourth was paid in cash and the company signed a note for the balance (due in six months). Lent $3,000 to one of the investors who signed a note due in six months. Chris Stoschek purchased a truck for personal use; paid $6,900 down and signed a one-year note for $31,500. Paid $21,500 on the note for the construction equipment in (b) (ignore interest). Required: 1. Create T-accounts for the following accounts: Cash, Notes Receivable, Equipment, Land, Notes Payable, Common Stock, and Additional Paid-in Capital. Beginning balances are $0. For each of the preceding transactions, record the effects of the transaction in the appropriate T-accounts. Include good referencing for each T-account.
Explanation / Answer
PRECISION BUILDERS CONSTRUCTION COMPANY Cash Account Particulars Debit($) Particulars Credit($) To Investors(paid in Capital) 58000 By Equipment 13250 ($58000 in total from 3 partners) By Investors(paid in capital) 3000 By Notes Payable 21500 By Balance C/d 20250 58000 58000 Notes Receivable Account Particulars Debit($) Particulars Credit($) To Investors(paid in Capital) 3000 By Balance C/d 3000 3000 3000 Equipment Account Particulars Debit($) Particulars Credit($) To Cash 13250 By Balance C/d 53000 To Notes payable(6 Months) 39750 53000 53000 Land Account Particulars Debit($) Particulars Credit($) To Investors(paid in Capital) 33000 By Balance C/d 33000 33000 33000 Notes Payable Account Particulars Debit($) Particulars Credit($) To Cash 21500 By Equipment 39750 To Balance C/d 18250 39750 39750 Common Stock Account Particulars Debit($) Particulars Credit($) To Balance C/d 300 By Investors(paid in capital) 300 (1000shares*0.10*3) 300 300 Additional Paid in capital Account Particulars Debit($) Particulars Credit($) To Common Stock 300 By Cash 58000 (1000shares*0.10*3) By Land 33000 To Cash 3000 By Notes Receivable 3000 To Balance C/d 90700 94000 94000 Note 1. Depreciation is ignored since no depreciation rate is given on Equipment A/c 2. Chris Stoschek purchased truck, business accounts will not be affected due to this transaction since it is purchased for his personal purpose 3.Entries for recording loan given to partner a) For giving loan Investor A/c Dr 3000 To Cash 3000 b) For Receiving Notes Receivable Notes Receivable A/c Dr 3000 To Investor A/c 3000
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