Question

Prepare a Trail Balance for Dennen, Inc as of January 31?

Follow the transaction of Dennen, Inc for the month of January.

The effect of these transaction is not included I the beginning balance shown.

Borrowed $30,000 from a local bank,

Lent 10,000 to affiliate due in 1 year,

Sold to an investor 100 additional share with a .10 per share and a market price of $5 per share and received cash,

Purchased $15,000 on equipment paying $5,000 cash and signing a note for the rest due in 1 year,

Declared and paid $2,000 in dividends to stockholders.

Prepare a Trail Balance for Dennen, Inc as of January 31?

Cash

Cash. Bal. 900

Notes Receivable

Beg, Bal. $1,000

Equipment

Beg. Bal. $15,100

Notes payable

Credit Beg. Bal. $3,000

Common stock

Beg. Bal 1,000

Additional paid-in-capital

Beg. Bal 3,000

Retained earning

Beg Bal 10,000

Prepare a trail balance for Dennen, Inc as of January 31

Answer 1

Beginning Balance	Debit	Credit
Equipment	15,100
Notes recevable	1,000
Cash	900
Common Stock		1,000
Retained Earnings		10,000
Notes Payble		3,000
Additional Paid in Capital		3,000
Total	17,000	17,000

Transaction

a) Borrowed $30,000 from a local bank.

A bank loan is a cash debit with liabilities credit

	Debit	Credit
Cash	30,000
Notes Payable		30,000

b) Lent $10,000 to an affiliate due in 1 year.

Two asstes are involved in the opration the first is the recivable that was accepted for one year and second is cash outflow

	Debit	Credit
Notes Recivable	10,000
Cash		10,000

c) Sold to an investor 100 additional share with a $0.10 per share and a market price of $5 per share and received cash.

The sale of 100 Shares at $5 each is a cash debit of 100*$5= $500. A credit must be made to the common stock account of the number of shares for the nonminal value that is 100*$0.10= $10. A credit is made to the additional paid in capital account for the difference between $500 and $10 which is $490.

	Debit	Credit
Cash	500
Common Stock		10
Additional Paid in capital		490

d) Purchased $15,000 on equipment paying $5,000 cash and signing a note for the rest due in 1 year.

Three accounts are affected in the operation, Equipment has a debit of $15,000 which is its purchase value. $5,000 cash credit which was paid in cash and a note payble from the rest is $10,000.

	Debit	Credit
Equipment	15,000
Cash		5,000
Notes Payable		10,000

e) Declared and paid $2,000 in dividends to stockholders.

A debit of $2,000 is made to retained earings to deduct balance, a credit or cash out is made for the same amount $2,000 that was paid.

	Debit	Cash
Retained earnings	2,000
Cash		2,000

Ending Balance

	Debit	Credit
Equipment	30,000
Notes Recivable	11,000
Cash	14,400
Common Stock		1,010
Retained Earnings		8,000
Notes Payble		43,000
Additional Paid in capital		3490
Total	55,500	55,500