Question

a. Susan and Lucy opened up Gardening Made Easy by contributing $23,800 on July 1, 2009, in exchange for common stock. b. The firm borrowed $17,000 from the bank on July 1. The note is a 3-year, 8% note, with both principal and interest to be repaid on June 30, 2010. C. The firm prepaid a year of rent for $1,350 that started August 1, 2009. d. The firm paid $975 cash for operating expenses for the first month. e. The firm earned $11,500 in revenue the first month. Of that amount, $7,000 was collected in cash. f. The firm hired an administrative assistant and paid $585 cash in salary expense for the first month. g. The firm declared and paid distributions to owners in the amount of $2,150 for the first month. h. At the end of the month, $38 of interest payable is due but not yet paid on the note from item (b).

Answer 1

Assets $ Account a. 23,800 Cash Liabilities Account Shareholders' equity + Contributed capital + Retained eanrings + $ Account + $ Account +23,800 Common stock + $ b. 17000 Cash 17000 Note payable C. -1350 Cash 1350 Prepaid rent -975 Cash d. + -975 Operating expenses + 11500 Revenue 7,000 Cash | 4,500 Accounts receivable -585 Cash + -585 Salaries expense 011111111 g. -2150 Cash + -2150 Dividends 38 Interest payable + + -38 Interest expense