Question

How do you create the journal entries and T-accounts for this problem

HWK #2 Instrirtinns [1] Swrd tn this PC john sullivan File Home Insert Draw Design Layout References Mailings Review View Help Tell me what you want to do Share Comments Rplar Select Copy Pastr Dictate tyles Spa Corporation has been operating tor two years. The December 31, 2017 account balances are: S132,000 Accounts Payable Salaries Payable Notes Payable long term $102,340 Accounts Receivable Inventory Short-tenm Investments 42,610Sala 46.500 149.600 113,650 113,540 16,420Contriuted Capital Retained Earnings During the year 2018, the company had the below activities. Note that none of these activities should impact the income stateuent, only the balance sheet; we are assuming for simplicity that the company did not have any rcvenues or expenscs during 2018. a. Purchased additional equipment costing $19,000; paying S4,300 in cash and signing a promissory note to pay the balance in three b. Issucd 10,000 shares of stock, rocciving S69,000 in cash and land valucd at $7,500 from investors. e. Collected $19,000 cash d. Paid off $33,000 of salaries owed from the prior year e. Reccived a $50,000 loan from the bank, payable in four ycars. f. Ordered supplies worth 5,300 from Concord Supplies to be delivered next i on open accounts receivable from customers monlb. g. Bought additional inventory for $7,460 ou account. h. Returned some defective inventory to a supplier tor a full cash retund of S200. i. Paid off $20,000 of notes payable a year early. Ignore interest. j. Purchased additional short-term investueuts for $4.800 cash Page 1 of2 60 words + 10% O Type here to search 248 PM

Answer 1

Solution to Question 1
	Figures are in USD otherwise stateed
Balance sheet
Assets	2017	Liabilities	2017
Current assets		Current liabilities
Cash	207,900	Salary payable	13,500
Inventory	30,260	Promisory note	14,500
Accounts receivable (AR)	23,610	Accounts payable	110,000
Equipment	161,000	Long term debt	179,600
Land	177,300	Common stock	190,150
Short term investments	21,220	Retained eanrings	113,540
Total	621,290	Total	621,290
Workings :
A	Retained earnings
		2018
	Opening balance	113540
	During the year profits	0
	Closing blaance	113540
B	Cash account
	Opening balance	132,000
Add/(Less)
	Purchased additional equipment	(4,500)
	proceeds from issue of shares	69,000
	Collection from customers	19,000
	Salaries paid	(33,000)
	Loan from bank	50,000
	Cash refund on return of defective product	200
	Note payable	(20,000)
	Short term investments	(4,800)
	Closing balance	207,900
C	Equipment
		2018
	Opening balance	142000
Add/(Less)
	Purchased additional equipment	19000
	Closing blaance	161000
D	Land
		2018
	Opening balance	169800
Add/(Less)
	Land from shareholder	7500
	Closing blaance	177300
E	Promisory note
		2018
	Opening balance	0
Add/(Less)
	amount payable on purchase of equipment	14500
	Closing blaance	14500
F	Equity
		2018
	Opening balance	113650
Add/(Less)
	Issue of 10000 shares	76500
	Closing blaance	190150
G	Accounts receivable
		2018
	Opening balance	42610
Add/(Less)
	Collection	-19000
	Closing blaance	23610
H	Salary payable
		2018
	Opening balance	46500
Add/(Less)
	Paid	-33000
	Closing blaance	13500
I	Debt
		2018
	Opening balance	149600
Add/(Less)
	Received loan	50000
	Paid	-20000
	Closing blaance	179600
J	No treatment of ordered supplies as no movement of inventory happens during the year
K	Inventory
		2018
	Opening balance	23000
Add/(Less)
	Purchased	7460
	Defective inventory	-200
	Closing blaance	30260
L	Short term investments
		2018
	Opening balance	16420
Add/(Less)
	Purchased	4800
	Closing blaance	21220
M	Accounts payable
		2018
	Opening balance	102540
Add/(Less)
	Purchased	7460
	Closing blaance	110000
Solution to Question 2
Journal entries
Event	Accounts	Debit	Credit
a	Equipment	19000
	Cash		4500
	Promisory note		14500
b	Cash	69000
	Land	7500
	Common stock		76500
c	Cash	19000
	Accounts receivable		19000
d	Salaries payable	33000
	Cash		33000
e	Cash	50000
	Loan		50000
f	No entry
g	Inventory	7460
	Accounts payable		7460
h	Cash	200
	Inventory		200
i	Notes payable	20000
	Cash		20000
j	Short term investments	4800
	Cash		4800