dscapes, Inc. Mini Practice Part2 Bill Graham and Larry Miller incorporated B&L;

Question

dscapes, Inc. Mini Practice Part2 Bill Graham and Larry Miller incorporated B&L; Landscapes, Inc. on July 1, 2014. The business consists of lawn care and sprinkler system installations. In addition, they also sell two types of fertilizer. Bill and Larry are concerned about ensuring a steady supply of high quality PVC pipe for the sprinkler installations jobs they do and have come up with a plan to issue bonds to several of their family members. These funds will enable them to acquire a significant portion of the stock of a local PVC manufacturer. At the end of July, 2015, the company has the following adjusted trial balance: B&L; Landscapes, Inc Trial Balan 47,7S0 for Doubstfull Accounts Boilding Retained Eanings 92,700 Not included in the adjusted trial balance are the following transactions that occur on July 31, 2015. l. B&L; Landscapes, Inc. issued S20.000 worth of 5%, 10 year https:i/lcocodesine2learm.comld2Vle/dropbox/1525475/1065455/DownloadAttachmentid-16430228 Page 1 of

Explanation / Answer

Solution;

1

Journal entry

Debit

credit

1

cash

20000

    bonds payable

20000

2

stock investment

40000

    cash

40000

2. Ledgers

cash

stock invertment

40000

opening balance

47750

closing balance

27750

bonds payable

20000

67750

67750

credit

bonds payable

debit

cash

20000

closing balance

20000

20000

20000

credit

stock invetment

debit

closing balance

40000

cash

40000

40000

40000

3.Classified balance sheet

$

$

$

ASSETS

CURRENT ASSETS

Accounts Receivable

9500

Less : allowance for doutful accounts

-400

9100

Prepaid insurance

1700

inventory

59000

cash

27750

97550

LONG TERM INVESTMENT

STOCK INVESTMENT

40000

Property, plant, equipment

Equipment

42500

Accumulated Depr.

-7500

35000

LAND

8000

Building

25000

Accumulated Depr.

-1350

23650

66650

TOTAL ASSET

204200

LIABILITIES AND EQUITIES

CURRENT LIABILITIES

accounts Payable

11500

Notes Payable

45000

income tax payable

Salaries and Wages Payable

56500

LONG TERM LIABILITIES

Bonds Payable

20000

TOTAL LIABILITIES

76500

STOCKHOLDER'S EQUITY

Preferred stock

5000

COMMON STOCK

30000

RETAINED EARNING

92700

127700

TOTAL LIABILITIES AND EQUITIES

204200

4

Journal entry

Debit

credit

1

cash (2000*30%)

600

    Revenue from stock investment

600

1

Journal entry

Debit

credit

1

cash

20000

    bonds payable

20000

2

stock investment

40000

    cash

40000

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