Question

Use T-accounts to record the 14 transactions noted below for this new start-up company. Record all entries affecting the income statement into “Equity” since there are no separate T-accounts set up for the individual income statement accounts. A T-account form for you to use is provided as a separate attachment for you to print out and post these transactions. Once all transactions have been posted, populate the net ending balance for each account for the accounts listed below. These are the answers you will post to this online assignment. Transactions: New company start up; Owners invest $100,000 to buy shares from company. Company buys factory equipment for $20,000; Payment terms are net 30 days; Asset life = 5 years and will be depreciated in the future using straight line depreciation. Company buys inventory for $100,000; Payment terms - 50% @ purchase; 50% net 30 days. Company borrows $50,000 from bank due in 5 years. Company generates sales of $25,000 with a product cost of $40,000; Payment terms are net 30 days. Company records warranty expense of $5,000 to establish a warranty reserve for future claims. Company pays supplier for factory equipment purchased last month. Customer pays company for sales generated last month. Company pays suppliers for inventory purchased last month. Company generates sales of $15,000 with a product cost of $10,000; Payment terms are net 30 days. Company records warranty expense of $2,000 to establish a warranty reserve for future claims. Company records a bad debt receivables reserve of $2000 for potential uncollectible receivables. Company records first month of depreciation expense for factory equipment purchased last month. Round to the nearest whole $ amount. Company buys inventory for $15,000; Payment terms net 30 days. Note: A T-account table is provided for you to use to answer this question in Blackboard. After working through the T-accounts, the net balances for each of the Balance Sheet accounts listed below must be populated/answered:

Cash -

Net Receivables -

Inventory -

Fixed Assets -

Total Assets -

Accounts Payable -

Other Accrued Liabilities -

Cash Receivables Inventory Fixed Assets #1 #2 #3 #9 # 10 #11 #12 # 13 # 14 Accounts Payable Other Accrued Liability Debt Stockholders' Equity #1 #2 #3 #4 #5 #6 #8 #10

Answer 1

	cash
particulars	amt	particulars	amt
to stockholders equity	100000	by inventory	50000
to debt	50000	by stockholders equity	5000
		by debt	20000
		by stockholders equity	2000
		by bal c/d	73000
	150000		150000
by bal b/d	73000
	Receivables
particulars	amt	particulars	amt
to inventory	25000	by stockholders equity	2000
to inventory	15000	by bal c/d	38000
	40000		40000
to bal b/d	38000
	inventory
particulars	amt	particulars	amt
to cash	50000	by accounts receivables	25000
to accounts payable	50000	by accounts receivables	15000
to accounts payable	15000	by bal c/d	75000
	115000		115000
to bal b/d	75000
	fixed assets
particulars	amt	particulars	amt
to other accrued liability	20000	by stockholders equity	333
		by bal c/d	19667
	20000		20000
to bal b/d	19667
	accounts payable
particulars	amt	particulars	amt
to bal c/d	65000	by inventory	50000
		by inventory	15000
	65000		65000
		by bal b/d	65000
	debt
particulars	amt	particulars	amt
to cash	20000	by cash	50000
to bal c/d	30000
	50000		50000
		by bal b/d	30000
	stockholders equity
particulars	amt	particulars	amt
to cash	5000	by cash	100000
to cash	2000
to fixed assets	333
to accounts receivables	2000
to bal c/d	90667
	100000		100000
		by bal b/d	90667
	other accrued liability
particulars	amt	particulars	amt
to bal c/d	20000	by fixed assets	20000
	20000		20000
		by bal b/d	20000

Cash - 73000

Net Receivables - 38000

Inventory -75000

Fixed Assets -19667

debt -30000

Accounts Payable -65000

Other Accrued Liabilities -20000