Question

Athletic Performance Company (APC) was incorporated as a private company. The company’s accounts included the following at July 1:

Accounts Payable	$	5,950
Buildings		172,000
Cash		14,900
Common Stock		325,000
Equipment		34,500
Land		134,500
Notes Payable (long-term)		33,750
Retained Earnings		0
Supplies		8,800

During the month of July, the company had the following activities:

1. Issued 4,000 shares of common stock for $400,000 cash.
2. Borrowed $54,750 cash from a local bank, payable in two years.
3. Bought a building for $176,250; paid $44,250 in cash and signed a three-year note for the balance.
4. Paid cash for equipment that cost $236,000.
5. Purchased supplies for $13,500 on account.

1. Analyze transactions (a)-(e) to determine their effects on the accounting equation. (Enter any decreases to account balances with a minus sign.) Assets + Cash 14,900 Supplies 8,800 Building 172,000 Equipment 34,500 Land 134,500 Liabilities Accounts Notes Payable Payable 5,950 33,750 Stockholders' Equity Common Retained Stock Earnings 325,000 Beg. End. 14,900 8,800 172,000 34,500 134,500 5,950 33,750 325,000

Record the transaction effects determined in part 1 using journal entries. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Summarize the journal entry effects from part 2 using T-accounts. (TIP: Enter the July 1 balances as the month’s beginning balances.)

Prepare a trial balance at July 31.

Prepare a classified balance sheet at July 31.

As of July 31, has the financing for APC’s investment in assets primarily come from liabilities or stockholders’ equity?

Answer 1

Cash Supplies Beg. $ 14,900 $ 8,800 a. $4,00,000 $ - b. $ 54,750 $ - c. $ -44.250 $ - d. $ - $ 13,500 $ 4,25,400 $ 22,300 Assets Building Equipment Land $ 1,72,000 $ 34,500 $1,34,500 $ - $ - $ - $ - $ - $ - $ 1.76.250 $ - $ - $ - $ - $ - $ 3.48.250 $ 34,500 $1,34,500 Liabilities Accounts payable Notes Payable $ 5,950 $ 33,750 $ - $ - $ - $ 54,750 $ - $ 1.32.000 $ 13,500 $ - 19,450 $ 2.20,500 Stockholders' Equity Common Stock Retained Earnings $ 3,25,000 $ $ 4,00,000 $ $ . $ . $ . 7,25,000 $

End.Bal Cash Beg. Bal $ 14,900 Building $ 44,250 Common Stock $4,00,000 End.Bal $4,25,400 Notes Payable $ 54,750 $4,69,650 $4,69,650 Notes Payable $2,20,500 Beg. Bal $ 33,750 Cash $ 54,750 Building $1,32,000 $2,20,500 $ 2,20,500 End.Bal End.Bal Common Stock $7,25,000 Beg. Bal $3,25,000 Cash $4,00,000 $7,25,000 $ 7,25,000 Accounts Payable $ 19,450 Beg. Bal $ 5,950 Supplies $ 13,500 $ 19,450 $ 19,450 Beg. Bal Cash Notes Payable Supplies Beg. Bal $ 8,800 End.Bal $ 22,300 Accounts Payable $ 13,500 $ 22,300 $ 22,300 Building $1,72.000 End.Bal $3.48.250 | $ 44,250 $1,32,000 $3,48,250 $3,48,250 Equipment $ 34,500 End.Bal $ 34,500 $ 34,500 $ 34,500 Beg. Bal Beg. Bal Land $1,34,500 End.Bal $1,34,500 $1,34,500 $ 1,34,500

Assets $ $ 4,25,400 22,300 Trail Balance Cash $4,25,400 Building $3,48,250 Equipment $ 34,500 Land $ 1,34,500 Supplies $ 22,300 Accounts Payable Notes Payable Common Stock $9,64,950 Balance Sheet Liabilities & Stockholder's Equity Current Liabilities Accounts Payable $ 19,450 Notes Payable $2,20,500 4,47,700 Total Current Liabilities 3,48,250 Stockholder's Equity 34,500 Common Stock 1,34,500 9,64,950 Total Liabilities & Stockholder's Equity Current Assets Cash Supplies Total Current Assets Building Equipment Land Total Assets $ 2,39,950 $ $ $ $ $ $ 19,450 $2,20,500 $7,25,000 $9,64,950 $ 7,25,000 $ 9,64,950