Question

Please solve question 2

Sparty Corporation has been operating for two years. The December 31, 2018 account balances are: Cash Accounts Receivable Inventory Short-term Investments Equipment Land $250,000 65,000 29,000 20,000 180,000 210,000 Accounts Payable Salaries Payable Notes Payable - long term Contributed Capital Retained Earnings $190,000 45,000 175,000 220,000 124,000 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. 8. Paid off $25,000 of notes payable a year earlyt Ignore interest. h. Purchased additional equipment costing $40,000; paying $10,000 in cash and signing a promissory note to pay the balance in three years. i. Issued 20,000 shares of stock, receiving $100,000 in cash and land valued at $8,000 from investors. j. Paid off $30,000 of salaries owed from the prior year.

Thanks in advance!

Answer 1

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]
	SUM	$296,000	$296,000

Explanations:

A+ Asset increases, A- asset decreases, L+ liabilities increases, L- Liabilities decreases, E+ equity increases

For the Event f, No Entry because no transaction.