B&L Landscapes, Inc. Mini Practice Part 2 Bill Graham and Larry Miller incorpora
ID: 2425529 • Letter: B
Question
B&L Landscapes, Inc. Mini Practice Part 2
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.
Adjusted Trial Balance
July 31, 2015
DEBIT
CREDIT
Cash
$ 47,750
Accounts Receivable
9,500
Allowance for Doubtful Accounts
400
Prepaid Insurance
1,700
Inventory
59,000
Land
8,000
Building
25,000
Accumulated Depreciation - Building
1,350
Equipment
42,500
Accumulated Depreciation - Equipment
7,500
Accounts Payable
11,500
Notes Payable
45,000
Preferred Stock
5,000
Common Stock
30,000
Retained Earnings
92,700
Total
$193,450
$193,450
Not included in the adjusted trial balance are the following transactions that occur on July 31, 2015.
B&L Landscapes, Inc. issued $20,000 worth of 5%, 10 year bonds at face value.
B&L Landscapes, Inc. purchased 30% of the outstanding common stock of Crestline Pipe, Inc. for $40,000
Instructions:
Using the chart of accounts provided below, and the Excel template provided with this assignment, prepare journal entries, in good form, to record the issuance of bonds and the investment transactions. Start with Page 3 of the General Journal. Explanations are optional. Round all journal entries to two decimal places.
Post the entries to the general ledger provided. You only need to create ledgers for the accounts in Part 1. Record any existing account balances as beginning balances using the values from the adjusted trial balance.
Prepare a classified balance sheet for B&L Landscapes, Inc. for July 31, 2015.
On December 15, 2015, Crestline Pipe, Inc. pays a $2,000 dividend. Prepare the journal entry, in good form, to record B&L’s receipt of their share of the dividend. Record this
on Page 4 of the General Journal. Explanations are optional.
Crestline Pipe, Inc. reports total net income of $11,500 for the year ending December 31, 2015.
Record the necessary adjusting journal entries for B&L Landscapes, Inc. investments and bonds on Page 5 of the General Journal. Explanations are optional.
B&L Landscapes, Incorporated
Chart of Accounts
B&L Landscapes, Inc.
Adjusted Trial Balance
July 31, 2015
DEBIT
CREDIT
Cash
$ 47,750
Accounts Receivable
9,500
Allowance for Doubtful Accounts
400
Prepaid Insurance
1,700
Inventory
59,000
Land
8,000
Building
25,000
Accumulated Depreciation - Building
1,350
Equipment
42,500
Accumulated Depreciation - Equipment
7,500
Accounts Payable
11,500
Notes Payable
45,000
Preferred Stock
5,000
Common Stock
30,000
Retained Earnings
92,700
Total
$193,450
$193,450
Explanation / Answer
Journal Entries: Date Account Titles & Explanations Debit Credit 31-Jul-15 cash 20000 bonds payable 20000 (issue of 5%, 10 year bonds at face value) 31-Jul-15 investment in Crestline Pipe Inc 40000 cash 40000 (purchase of 30% of crestline-equity method of accounting) Balance Sheet of B&L Landscape as on July 31, 2015 ASSETS: Current Assets: Cash 27750 Accounts receivable 9500 less: allowance for doubtful accounts 400 9100 Prepaid insurance 1700 Inventory 59000 97550 Non_currrent Assets: Investment in Crestline Pipe Inc 40000 40000 Fixed Assets: Land 8000 Building 25000 Less: accumulated depreciation 1350 23650 Equipment 42500 Less: accumulated depreciation 7500 35000 66650 TOTAL ASSETS 204200 LIABILITIES: Current liabilities: Accounts payable 11500 Notes payable 45000 56500 Long term liabilities: Bonds payable 20000 Total liabilities 76500 Equity: Preferred stock 5000 Common stock 30000 Retained earnings 92700 Total equity 127700 TOTAL LIABILITIES & EQUITY 204200 GENERAL JOURNAL: Date Account Titles & Explanations Debit Credit 15-Dec-15 cash 2000 investment in Crestline Pipe Inc 2000 (cash dividends received) 31-Dec-15 investment in Crestline Pipe Inc 3450 equity in investee income (30% of 11500) 3450 (recording of proportionate share in net income)
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.