Fundamentals of Financial Accounting
5th Edition
ISBN: 9780078025914
Author: Fred Phillips Associate Professor, Robert Libby, Patricia Libby
Publisher: McGraw-Hill Education
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Chapter 2, Problem 2.11E
Recording Journal Entries and Preparing a Classified
Assume Down.com was organized on May 1 to compete with Despair.com—a company that sells de-motivational posters and office products. The following events occurred during the first month of Down.com's operations.
- a. Received $60,000 cash from the investors who organized Down.com Corporation.
- b. Borrowed $20,000 cash and signed a note due in two years.
- c. Ordered equipment costing $16.000.
- d. Purchased $9,000 in equipment, paying $2,000 in cash and signing a six-month note for the balance.
- e. Received the equipment ordered in (c), paid for half of it, and put the rest on account.
Required:
- 1. Summarize the financial effects of items (a)−(e) in a table or spreadsheet similar to Exhibit 2.5.
- 2. Prepare journal entries for each transaction. Be sure to use referencing and categorize each account as an asset (A), liability (L), or stockholders’ equity (SE). If a transaction does not require a
journal entry , explain the reason. - 3. Prepare a classified balance sheet at May 31. Include Retained Earnings with a balance of zero.
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Assume Down, Incorporated, was organized on May 1 to compete with Despair, Incorporated—a company that sells de-motivational posters and office products. Down, Incorporated, encountered the following events during its first month of operations.
Received $34,000 cash from the investors who organized Down, Incorporated
Borrowed $19,000 cash and signed a note due in two years.
Ordered equipment costing $16,000.
Purchased $10,000 in equipment, paying $2,000 in cash and signing a six-month note for the balance.
Received the equipment ordered in (c), paid for half of it, and put the rest on account.
Prepare a classified balance sheet at May 31. Include Retained Earnings with a balance of zero.
Assume Down, Incorporated, was organized on May 1 to compete with Despair, Incorporateda company that sells de - motivational posters and office products. Down, Incorporated,
encountered the following events during its first month of operations.a. Received $40,000 cash from the investors who organized Down, Incorporatedb. Borrowed $19,000 cash and
signed a note due in two years.c. Ordered equipment costing $22,000.d. Purchased $10,000 in equipment, paying $3,000 in cash and signing a six-month note for the balance.e.
Received the equipment ordered in (c), pald for half of it, and put the rest on account. Pleaae tell me the cash and equipment
The transactions relating to the formation of Blue Company Stores Incorporated, and its first month of operations follow.
a. The firm was organized and the stockholders invested cash of $7,400.
b. The firm borrowed $5,900 from the bank; a short-term note was signed.
c. Display cases and other store equipment costing $1,600 were purchased for cash. The original list price of the equipment was
$1,930, but a discount was received because the seller was having a sale.
d. A store location was rented, and $1,500 was paid for the first month's rent.
e. Inventory of $14,700 was purchased; $8,500 cash was paid to the suppliers, and the balance will be paid within 60 days.
f. During the first week of operations, merchandise that had cost $3,100 was sold for $5,100 cash.
g. A newspaper ad costing $100 was arranged for; it ran during the second week of the store's operations. The ad will be paid for in
the next month.
h. Additional inventory costing $4,350 was purchased; cash of $1,100 was paid,…
Chapter 2 Solutions
Fundamentals of Financial Accounting
Ch. 2 - Define the following: a. Asset b. Current asset c....Ch. 2 - Define a transaction anti give an example of each...Ch. 2 - For accounting purposes, what is an account?...Ch. 2 - What is the basic accounting equation?Ch. 2 - Prob. 5QCh. 2 - Prob. 6QCh. 2 - Prob. 7QCh. 2 - What is a journal entry? What is the typical...Ch. 2 - What is a T-account? What is its purpose?Ch. 2 - Prob. 10Q
Ch. 2 - Prob. 11QCh. 2 - Which of the following is not an asset account? a....Ch. 2 - Which of the following statements describe...Ch. 2 - Total assets on a balance sheet prepared on any...Ch. 2 - The duality of effects can best be described as...Ch. 2 - The T-account is used to summarize which of the...Ch. 2 - Prob. 6MCCh. 2 - A company was recently formed with 50,000 cash...Ch. 2 - Which of the following statements would be...Ch. 2 - Prob. 9MCCh. 2 - Prob. 10MCCh. 2 - Prob. 2.1MECh. 2 - Prob. 2.2MECh. 2 - Matching Terms with Definitions Match each term...Ch. 2 - Prob. 2.4MECh. 2 - Prob. 2.5MECh. 2 - Prob. 2.6MECh. 2 - Prob. 2.7MECh. 2 - Identifying Events as Accounting Transactions Half...Ch. 2 - Determining Financial Statement Effects of Several...Ch. 2 - Preparing Journal Entries For each of the...Ch. 2 - Posting to T-Accounts For each of the transactions...Ch. 2 - Reporting a Classified Balance Sheet Given the...Ch. 2 - Prob. 2.13MECh. 2 - Prob. 2.14MECh. 2 - Identifying Transactions and Preparing Journal...Ch. 2 - Prob. 2.16MECh. 2 - Prob. 2.17MECh. 2 - Prob. 2.18MECh. 2 - Prob. 2.19MECh. 2 - Prob. 2.20MECh. 2 - Prob. 2.21MECh. 2 - Prob. 2.22MECh. 2 - Prob. 2.23MECh. 2 - Prob. 2.24MECh. 2 - Prob. 2.25MECh. 2 - Prob. 2.1ECh. 2 - Prob. 2.2ECh. 2 - Classifying Accounts and Their Usual Balances As...Ch. 2 - Determining Financial Statement Effects of Several...Ch. 2 - Prob. 2.5ECh. 2 - Recording Journal Entries Refer to E2-4. Required:...Ch. 2 - Prob. 2.7ECh. 2 - Analyzing the Effects of Transactions in...Ch. 2 - Inferring Investing and Financing Transactions and...Ch. 2 - Analyzing Accounting Equation Effects, Recording...Ch. 2 - Recording Journal Entries and Preparing a...Ch. 2 - Analyzing the Effects of Transactions Using...Ch. 2 - Explaining the Effects of Transactions on Balance...Ch. 2 - Prob. 2.14ECh. 2 - Prob. 2.15ECh. 2 - Determining Financial Statement Effects of Various...Ch. 2 - Recording Transactions (in a Journal and...Ch. 2 - Recording Transactions (in a Journal and...Ch. 2 - Determining Financial Statement Effects of Various...Ch. 2 - Recording Transactions (in a Journal and...Ch. 2 - Recording Transactions (in a Journal and...Ch. 2 - Determining Financial Statement Effects of Various...Ch. 2 - Prob. 2.2PBCh. 2 - Prob. 2.3PBCh. 2 - Prob. 2.1SDCCh. 2 - Prob. 2.2SDCCh. 2 - Prob. 2.4SDCCh. 2 - Prob. 2.5SDCCh. 2 - Accounting for the Establishment of a Business...
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