Question

Required information Assume Down, Inc., was organized on May 1 to compete with Despair, Inc.—a company that sells de-motivational posters and office products. Down, Inc., encountered the following events during its first month of operations.

Received $43,000 cash from the investors who organized Down, Inc.

Borrowed $16,000 cash and signed a note due in two years.

Ordered equipment costing $25,000.

Purchased $7,000 in equipment, paying $3,000 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.

Required: Summarize the financial effects of items (a)–(e) in a TABLE (Enter any decreases to account balances with a minus sign.)

Answer 1

Cash	43000
Owners capital		43000
To record Capital
Cash	16,000
Notes payable		16000
To record Borrowed 16,000
No entry required to enter Equipment Order since there is no transaction
Cash		-3000
Notes payable in six months		4000
Equipment	7000
To record Purchase of Equipment
Cash		-12500
Accounts Payable		12500
Equipment	25000
To show purchase of equipment

Note: Cash Decrease is mentioned in Negative but to balance the journal it should be added with the column as positive