Question

HOMEWORK #2 Due January 24, 5:00 pm 10 points Sparty Corporation has been operating for two years. The December 31, 2018 account balances are: Accounts Payable Salaries Payable $190,000 Cash $250,000 Accounts Receivable 65,000 45,000 Notes Payable – long term Inventory 175,000 29,000 Contributed Capital Retained Earnings Short-term Investments 20,000 220,000 Equipment Land 180,000 210,000 124,000 During the year 2019, the company had the below activities. Note that none of these activities should impact the income statement, only the balance sheet; we are assuming for simplicity that the company did not have any revenues or expenses during 2019. a. Collected $15,000 cash on open accounts receivable from customers. b. Bought additional inventory for $2,000 on account. c. Received a $70,000 loan from the bank, payable in four years. d. Purchased additional short-term investments for $5,000 cash. e. Returned some defective inventory to a supplier for a full cash refund of $1,000. f. Ordered supplies worth $9,000 from Concord Supplies to be delivered next month,

Answer 1

Requirement 2

Journal Entries:

Event	Account title and explanation	Debit	Credit
a	Cash (A+)	$15,000
	Accounts receivable (A-)		$15,000
	[To record collections from customers]
b	Inventory (A+)	$2,000
	Accounts payable (L+)		$2,000
	[To record purchased inventory on account]
c	Cash (A+)	$70,000
	Notes payable (L+)		$70,000
	[To record loan from bank]
d	Short-term investments (A+)	$5,000
	Cash (A-)		$5,000
	[To record purchase of short-term investments]
e	Cash (A+)	$1,000
	Inventory (A-)		$1,000
	[To record purchase returns]
f	No Entry
g	Notes payable (L-)	$25,000
	Cash (A-)		$25,000
	[To record paid for notes payable]
h	Equipment (A+)	$40,000
	Cash (A-)		$10,000
	Notes payable (L+)		$30,000
	[To record purchase of equipment]
i	Cash (A+)	$100,000
	Land (A+)	$8,000
	Common stock (E+)		$108,000
	[To record issuance of common stock]
j	Salaries payable (L -)	$30,000
	Cash (A-)		$30,000
	[To record paid for salaries owed]

For the event f, No entry because no transaction.

Requirement 3 &4:

T-Accounts:

Cash			Accounts receivable			Inventory
$ 250,000.00	$      5,000.00		$    65,000.00	$    15,000.00		$    29,000.00	$      1,000.00
$    15,000.00	$    25,000.00					$      2,000.00
$    70,000.00	$    10,000.00
$      1,000.00	$    30,000.00
$ 100,000.00
$ 366,000.00			$    50,000.00			$    30,000.00
Short-Term investment			Equipment			Land
$    20,000.00			$ 180,000.00			$ 210,000.00
$      5,000.00			$    40,000.00			$      8,000.00
$    25,000.00			$ 220,000.00			$ 218,000.00
Accounts payable			Salaries payable			Notes payable-Long term
	$ 190,000.00		$    30,000.00	$    45,000.00		$    25,000.00	$ 175,000.00
	$      2,000.00						$    70,000.00
							$    30,000.00
	$ 192,000.00			$    15,000.00			$ 250,000.00
Contributed Capital			Retained Earnings
	$ 220,000.00			$ 124,000.00
	$ 108,000.00
	$ 328,000.00			$ 124,000.00

Requirement 5:

Trial Balance

Trial balance
Account title	Debit	Credit
Cash	$366,000
Accounts receivable	$50,000
Inventory	$30,000
Short-term investment	$25,000
Equipment	$220,000
Land	$218,000
Accounts payable		$192,000
Salaries payable		$15,000
Notes payable-long term		$250,000
Contributed capital		$328,000
Retained earnings		$124,000
Total	$909,000	$909,000

Requirement 6:

Balance Sheet:

Balance Sheet
Assets		Liabilities and Stockholders' equity
Current assets:		Current liabilities:
Cash	$366,000	Accounts payable	$192,000
Accounts receivable	$50,000	Salaries payable	$15,000
Inventory	$30,000	Total current liabilities	$207,000
Short-term investment	$25,000	Long-term liabilities:
Total current assets	$471,000	Notes payable	$250,000
Property,plant,and equipment:		Total liabilities	$457,000
Equipment	$220,000	Stockholders' equity:
Land	$218,000	Contributed capital	$328,000
Total property,plant and equipment	$438,000	Retained earnings	$124,000
		Total stockholders' equity	$452,000
Total Assets	$909,000	Total liabilities and stockholders' equity	$909,000