CP2-2 Recording Transactions (in a Journal and T-Accounts); Preparing and Interpreting the Balance Sheet [LO 2-2, LO 2-3, LO 2-4, LO 2-5]
[The following information applies to the questions displayed below.]
Athletic Performance Company (APC) was incorporated as a private company. The companyâs accounts included the following at July 1:
Accounts Payable $ 6,700 Building 268,000 Cash 10,150 Common Stock 404,000 Equipment 34,750 Land 112,000 Notes Payable (long-term) 22,750 Retained Earnings 0 Supplies 8,550
During the month of July, the company had the following activities:
During the month of July, the company had the following activities:
a. Issued 3,400 shares of common stock for $340,000 cash. b. Borrowed $34,250 cash from a local bank, payable in two years. c. Bought a building for $211,000; paid $55,000 in cash and signed a three-year note for the balance. d. Paid cash for equipment that cost $127,000. e. Purchased supplies for $18,500 on account.
Required: 1. Analyze transactions (a)â(e) to determine their effects on the accounting equation. (Enter any decreases to account balances with a minus sign.)
Assets = Liabilities + Stockholders' Equity Cash Supplies Building Equipment Land Accounts Payable Notes Payable Common Stock Retained Earnings Beg. 10,150 8,550 268,000 34,750 112,000 6,700 22,750 404,000 a. b. c. d. e. End.
2. Record the transaction effects determined in part 1 using journal entries. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
1.) Issuance of 3,400 shares of common stock for $340,000 cash. Record the transaction.
2.) The borrowing of $34,250 cash from a local bank, payable June in two years. Record the transaction.
3.) The purchase of a building for $211,000; paid $55,000 in cash and signed a three-year note for the balance. Record the transaction.
4.) The payment of cash for equipment that cost $127,000. Record the transaction.
5.) The purchase of supplies for $18,500 on account. Record the transaction.
Transaction General Journal Debit Credit
a.
CP2-2 Part 3
3. Summarize the journal entry effects from part 2 using T-accounts. (TIP: Enter the July 1 balances as the monthâs beginning balances.)
Cash Supplies Beg. Bal. Beg. Bal. End. Bal. End. Bal. Equipment Building Beg. Bal. Beg. Bal. End. Bal. End. Bal. Land Accounts Payable Beg. Bal. Beg. Bal. End. Bal. End. Bal. Notes Payable (long-term) Common Stock Beg. Bal. Beg. Bal. End. Bal. End. Bal. Retained Earnings Beg. Bal. End. Bal.
4. Prepare a trial balance at July 31.
ATHLETIC PERFORMANCE COMPANY Trial Balance Debit Credit Totals $0 $0
CP2-2 Recording Transactions (in a Journal and T-Accounts); Preparing and Interpreting the Balance Sheet [LO 2-2, LO 2-3, LO 2-4, LO 2-5]
| [The following information applies to the questions displayed below.] |
| Athletic Performance Company (APC) was incorporated as a private company. The companyâs accounts included the following at July 1: |
| Accounts Payable | $ | 6,700 | |
| Building | 268,000 | ||
| Cash | 10,150 | ||
| Common Stock | 404,000 | ||
| Equipment | 34,750 | ||
| Land | 112,000 | ||
| Notes Payable (long-term) | 22,750 | ||
| Retained Earnings | 0 | ||
| Supplies | 8,550 | ||
| During the month of July, the company had the following activities: |
| During the month of July, the company had the following activities: |
| a. | Issued 3,400 shares of common stock for $340,000 cash. |
| b. | Borrowed $34,250 cash from a local bank, payable in two years. |
| c. | Bought a building for $211,000; paid $55,000 in cash and signed a three-year note for the balance. |
| d. | Paid cash for equipment that cost $127,000. |
| e. | Purchased supplies for $18,500 on account. |
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| 1. | Analyze transactions (a)â(e) to determine their effects on the accounting equation. (Enter any decreases to account balances with a minus sign.)
CP2-2 Part 3
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Related questions
Prepare a statement of cash flowsâindirect method.
(LO 2), AP
Here are comparative balance sheets for Velo Company.
| VELO COMPANY Comparative Balance Sheets December 31 | ||
|---|---|---|
| Assets | 2017 | 2016 |
| Cash | $â63,000â | $â22,000â |
| Accounts receivable | 85,000â | 76,000â |
| Inventory | 170,000â | 189,000â |
| Land | 75,000â | 100,000â |
| Equipment | 270,000â | 200,000â |
| Accumulated depreciationâequipment | (66,000) | (32,000) |
| Total | $597,000â | $555,000â |
| Liabilities and Stockholders' Equity | ||
| Accounts payable | $â39,000â | $â47,000â |
| Bonds payable | 150,000â | 200,000â |
| Common stock ($1 par) | 216,000â | 174,000â |
| Retained earnings | 192,000â | 134,000â |
| Total | $597,000â | $555,000â |
Additional information:
Net income for 2017 was $93,000.
Cash dividends of $35,000 were declared and paid.
Bonds payable amounting to $50,000 were redeemed for cash$50,000.
Common stock was issued for $42,000 cash.
No equipment was sold during 2017, but land was sold atcost.
Instructions
Prepare a statement of cash flows for 2017 using the indirectmethod.
Cougar Plastics Company has been operating for three years. At December 31 of last year, the accounting records reflected the following:
| Cash | $ | 28,000 | Accounts payable | $ | 20,000 | |
| Investments (short-term) | 2,000 | Accrued liabilities payable | 3,400 | |||
| Accounts receivable | 3,200 | Notes payable (short-term) | 6,200 | |||
| Inventory | 29,000 | Notes payable (long-term) | 45,000 | |||
| Notes receivable (long-term) | 2,500 | Common stock | 10,600 | |||
| Equipment | 51,000 | Additional paid-in capital | 95,400 | |||
| Factory building | 104,000 | Retained earnings | 43,600 | |||
| Intangibles | 4,500 | |||||
During the current year, the company had the following summarized activities:
Purchased short-term investments for $7,300 cash.
Lent $5,400 to a supplier who signed a two-year note.
Purchased equipment that cost $25,000; paid $4,300 cash and signed a one-year note for the balance.
Hired a new president at the end of the year. The contract was for $84,000 per year plus options to purchase company stock at a set price based on company performance.
Issued an additional 2,500 shares of $0.50 par value common stock for $16,000 cash.
Borrowed $11,000 cash from a local bank, payable in three months.
Purchased a patent (an intangible asset) for $1,600 cash.
Built an addition to the factory for $25,000; paid $8,700 in cash and signed a three-year note for the balance.
Returned defective equipment to the manufacturer, receiving a cash refund of $1,800.
5. Prepare a classified balance sheet at December 31 of the current year.
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