Al, Bill and Chad organized the ABC Corporation on January 1, 2009. Each of thes
ID: 2434435 • Letter: A
Question
Al, Bill and Chad organized the ABC Corporation on January 1, 2009. Each of these owners invested $100,000 cash and received shares of stock. Below are selected transactions that were completed during January.(A.) Give the entry on ABC's books for each transaction:
Sold stock to the owners.
Borrowed $80,000 on one-year note payable.
Purchased land by signing a $70,000 note payable.
Paid $10,000 of accounts payable.
Purchased two service vehicles, $24,000 each; paid cash.
Purchased $2,000 of supplies on credit.
(B.) Calculate total assets, total liabilities and total stockholders' equity based only on the 6 transactions above:
Explanation / Answer
(A) The journal entries for the given transactions are Dr Cr. 1) Cash $300,000 Capital stock $300,000 2) Cash $80,000 Notes payable $80,000 3) Land $70,000 Notes payable $70,000 4) Notes payable $10,000 Cash $10,000 5) Vehicle $48,000 Cash $48,000 6) Supplies $2,000 Accounts payable $2,000 (B) The balance sheet items are computed as: Assets: Cash = $300,000 + $80,000 - $10,000 - $48,000 = $322,000 Land = $70,000 Vehicle = $48,000 Supplies = $2,000 Liabilities: Notes payable = $80,000 + $70,000 - $10,000 = $140,000 Accounts payable = $2,000 Stockholder's equiy: Capital stock = $300,000 Balance sheet In dollars Assets: Cash $322,000 Land $70,000 Vehicle $48,000 Supplies $2,000 ---------------------------------------------------------- Total assets $442,000 ---------------------------------------------------------- Liabilities: Accounts payable $2,000 Notes payable $140,000 Stockholder's equity: Capital stock $300,000 ------------------------------------------------------------- Total liabilities & stockholder's equity $442,000 -------------------------------------------------------------
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.