B&L; Landscapes, Inc. Mini Practice Part1 Bill Graham started his career mowing
ID: 2407515 • Letter: B
Question
B&L; Landscapes, Inc. Mini Practice Part1 Bill Graham started his career mowing lawns for neighbors while he was in junior high school. Bill worked summers for the local golf course while he was in high school and after he graduated, he started his own lawn care business, Bill's Lawn Care. In addition to lawn care, he also sells two types of fertilzer. Bill is ready to expand his business and wants to add sprinkler systems to his product offering. Larry Miller has an established sprinkler system business and they have agreed to merge their two businesses together. They considered the partnership form of business but have decided to incorporate. You are taking an accounting class at the local community college and have been helping Bill keep the accounting records for his business. He has asked you to stay on and establish and maintain the accounting records for the new company, B&L; Landscapes, Inc. Bill and Larry have hired an attorney and filed the incorporation paperwork with the state of Colorado. In the articles of incorporation, they are authorized to issue 150,000 shares of $1 par value common stock and 5,000 shares of $100 par value, 5%, non-cumulative, non-participating preferred stock. The new corporation will be created on July 1, 2016. The fair value of the assets and liabilitles of both companies are as follows: Bill's Lawn Care Account Cash Accounts Recelvable Prepaid Insurance Inventory Land Building Equipment Accounts Payable Notes Payable (due 4/30/2026) 1,000 9,000 35,000 7,500 5,000 45,000 Cash Accounts Recelvable Prepaid Insurance Inventony Equipment Accounts Payable Larry's Sprinkler Systems $11,000 3,000 100 1,000 10,000 5,000Explanation / Answer
1. General Journal Date Discription Post Ref Debit Credit Jul-01 Cash $11,500.00 Account receivable $500.00 Prepaid $500.00 Inventory $1,000.00 Land $9,000.00 Building $35,000.00 Equipment $7,500.00 Account payable $5,000.00 Notes payable $45,000.00 Common Stock $15,000.00 ( To Record Assets of Bill acquired) Jul-01 Cash $11,000.00 Account receivable $3,000.00 Prepaid $100.00 Inventory $1,000.00 Equipment $10,000.00 Account payable $5,000.00 Common Stock $20,100.00 ( To Record Assets of Larry acquired) Jul-01 Cash $5,000.00 Preferred Stock $5,000.00 (To Record Preferred stock issued to bill father) Jul-01 Cash $2,000.00 Preferred Stock $2,000.00 ( TO Record Preferred stock issued to larry mother) B&L Landscapes Inc Balance Sheet 01-Jul-16 Liabilities Amount Assets Amount Account payable $10,000 Cash $29,500 Notes payable $45,000 Account receivable $3,500 Common Stock $35,100 Prepaid $600 Preferred stock $7,000 Inventory $2,000 Land $9,000 Building $35,000 Equipment $17,500 $97,100 $97,100 3. Dividend distribution table Amount of dividend Dividend Declared $2,000 Shareholders Bill Stock $15,000 $855 Larry Stock $20,100 $1,145 $35,100 $2,000 4. Genral Journal Date Discription Post Ref Debit Credit 10-Jun-17 Retained Earning $2,000 Dividend Payable $2,000 (Dividend declared) 10-Jun-17 Dividend Payable $2,000 Cash $2,000 (Dividend paid)
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