Question

High KickHigh Kick ​Games, Inc. is a new corporation started on January​ 1,2018

The following transactions occurred during the first year of operations.

a.	On January​ 1, the owners invested a total of $ 49,000.00 (the par value of the​ stock) to start the company. In​ exchange, the corporation issued the owners​ 5,000 shares of common stock.
b.	On March​ 14, the company paid cash to purchase office equipment for $10,200.00
c.	On April​ 6, the company obtained a note from the bank for $96,000.
d.	On May​ 31, salaries were accrued for time worked in May in the amount of $9,000. These salaries will be paid in June.
e.	On June​ 15, the company paid cash to employees for salaries accrued on May 31.
f.	On July​ 12, company paid cash for legal fees associated with the startup of the company in the amount of $5,500.
g.	On September​ 6, the company sold $30,000 of merchandise to a large customer. The customer paid cash for half of the transaction and put the other half on her credit account with the vendor​ (ignore the inventory and cost of goods sold entry of this​ transaction).
h.	On November​ 1, the customer that purchased goods on September 6 paid off its credit account balance of $15,000 with cash.
i.	On December​ 14, the company made a $9,700 cash payment towards its outstanding bank note balance.

Requirements

a.	Show the effect of each transaction on​ assets, liabilities, and equity using the accounting equation.
b.	Prepare the journal entry for each transaction. Omit explanations.

Requirement a. Show the effect of each transaction on​ assets, liabilities, and equity using the accounting equation. ​(If a box is not used in the table leave the box​ empty; do not enter a zero. Enter a decrease in an account with a minus sign or parentheses. Abbreviations​ used: A/R​ = Accounts​ Receivable; Equip.​ = Equipment; Beg.​ R/E = Beginning Retained​ Earnings; Contr. Cap.​ = Contributed​ Capital; Rev.​ = Revenues; Exp.​ = Expenses; Div.​ = Dividends.)

Assets

=

Liabilities +

Stockholders' Equity

Ending Retained Earnings

Cash

+

A/R

+

Equip.

=

Liabilities

+

Contr.

+

Beg.

+

Rev. and

-

Exp. and

-

Div.

Cap.

R/E

Gains

Losses

Declared

a.

+

+

=

+

+

+

-

-

Answer 1

Requirement a:

Assets = Llabilities + Stockholders' Equity Ending Retained Earnings + Beg. + Rev. and - Exp.and - Div. R/E Gains Losses Declared Cash + A/R + Equip. = Liabilities + Contr. Cap. $49,000 $49,000 ($10,200) $96,000 $10,200 $96,000 $9,000 ($9,000) $9,000 $5,500 ($9,000) ($5,500) $15,000 $15,000 ($9,700) $140,600 $15,000 ($15,000) $30,000 ($9,700) $86,300 Total $0 $10,200 $49,000 $0 $30,000 $14,500 SO

Requirement b:

Date Credit Debit $49,000 Jan.1 Account title and Explanation Cash Common stock [To record issuance of common stock for cash] $49,000 $10,200 Mar.14 Office equipment Cash [To record purcahse of office quipment] $10,200 $96,000 Apri. 6 Cash Notes payable [To record issued note to the bank for cash] $96,000 $9,000 May 31 Salaries expense Salaries payable [To record accrued salaries expense] $9,000 $9,000 June 15 Salaries payable Cash [To record payment of salaries] $9,000 $5,500 July 12 Legal expenses Cash [To record legal expenses] $5,500 Sept.6 $15,000 $15,000 Cash Accounts receivable Sales revenue [To record sales on account and cash] $30,000 Nov.1 $15,000 Cash Accounts receivable [To record cash collection from customers] $15,000 $9,700 Dec.14 Notes payable Cash [To record cash paid for notes] $9,700