Question

Chapter 2-Balance Sheet Account SOLID FOOTING 23 Chapter 2 Homework Problem 2-1 Overpriced Jeans, Inc. Starts Business 15, Inc. started business. OverPriced Jeans is a othing manufacturers around the world, marks the jeans up On January 1, 2019, OverPriced Jeans Ine started business. Overric P riced Jeans merchandising company that specializes in brand name overpriced jeans. (OPJ) purchases jeans from various clothing manufacturers around the worn PJ borrows about 500%, and then sells the loans to various specialty stores located in me money from two different banks Bin Bank and erent banks: Big Bank and Lite Rank OPJ keeps some of its cash in Big Bank. OPJ keeps som Bank and some of its cash in the Rank Remand use the forms on Pgs 1930 complete this problem. Requirement 1 A. OPJ has the following General leder accounts Cash-Bia Bank, Cash-Little Bank, Inventory. Equipment. Note Pavable in Bank Note Pavable Little Bank, and Common Stock Label the "T" accounts using these account names B. Because OPJ started business on lanuary 1 2019 put a beginning balance of zero in each account. Label these amounts as "Beg. Balance Requirement 2 For each of the following transactions make the required entries in the General Journal Jan 01 The new owners of OP invest $75.000 of cash in the business. $70,000 of the cash is deposited in Big Bank: the rest is deposited in Little Bank, OPJ issues shares of Common Stock to the new owners. Jan 02 Purchase $50,000 of equipment. The cash to pay for the equipment is taken out of Big Bank Jan 05 OPJ gets a $65,000 loan from Big Bank and signs a note for the loan. The cash from the loan is deposited in Big Bank. The bank will not charge OPJ any interest on the loan for the month of January. Jan 10 OPJ gets a $60,000 loan from Little Bank and signs a note for the loan. The cash from the loan is deposited in Little Bank. The bank will not charge OPJ any interest on the loan for the month of January, Jan 20 $85,000 of jean inventory is purchased for cash. $50,000 of the cash to pay for the purchase is taken out of Big Bank; the remainder of the cash is taken out of Little Bank Purchase $10,000 of equipment. The cash to pay for the equipment is taken out of Little Bank. Requirement 3 Post the entries from the General Journal to the General Ledger accounts. Requirement 4 Compute an ending balance for each General Ledger account. Requirement 5 Prepare a Trial Balance. Requirement 6 Prepare OPJ's Balance Sheet as of January 31, 2019.

Answer 1

Date	Journal entry	Dr.($)	Cr.($)
Jan-01	Cash-Big Bank	70000
	Cash-Little Bank	5000
	To Common stock		75000
	(being issuance of shares)
Jan-02	Equipment	50000
	To Cash-Big Bank		50000
	(being purchase of equipment)
Jan-05	Cash-Big Bank	65000
	To Notes payable Big Bank		65000
	(being loan taken)
Jan-10	Cash-Little Bank	60000
	To Notes payable - Little Bank		60000
	(being loan taken)
Jan-20	Inventory	85000
	To Cash-Big Bank		50000
	To Cash-Little Bank		35000
	(being purchase of inventory)
Jan-25	Equipment	10000
	To Cash-Little Bank		10000
	(being purchase of inventory)

	Dr.($)	Cash-Big Bank		Cr.($)
Jan-01	Beginning balance	0	Jan-02	Equipment	50000
Jan-01	common stock	70000	Jan-20	Inventory	50000
Jan-05	Notes payable Big Bank	65000	Jan-31	Ending balance	35000
	total	135000		total	135000
	Dr.($)	Cash-Little Bank		Cr.($)
Jan-01	Beginning balance	0
Jan-01	common stock	5000	Jan-20	Inventory	35000
Jan-10	Notes payable Little Bank	60000	Jan-25	Equipment	10000
			Jan-31	Ending balance	20000
		65000			65000
	Dr.($)	Equipment		Cr.($)
Jan-01	Beginning balance	0
Jan-02	Cash-Big Bank	50000
Jan-25	Cash-Little Bank	10000	Jan-31	Ending balance	60000
		60000			60000
	Dr.($)	Inventory		Cr.($)
Jan-01	Beginning balance	0
Jan-20	cash-Big Bank	50000
Jan-20	Cash-Little Bank	35000	Jan-31	Ending balance	85000
		85000			85000
	Dr.($)	common stock		Cr.($)
			Jan-01	Beginning balance	0
			Jan-01	Cash-Big Bank	70000
Jan-31	Ending balance	75000	Jan-01	Cash-Little Bank	5000
		75000			75000
	Dr.($)	Notes payable Big Bank		Cr.($)
			Jan-01	Beginning balance	0
Jan-31	Ending balance	65000	Jan-05	Cash-Big Bank	65000
		65000			65000
	Dr.($)	Notes payable - Little Bank		Cr.($)
			Jan-01	Beginning balance	0
Jan-31	Ending balance	60000	Jan-10	Cash-Little Bank	60000
		60000			60000

Trial balance	Dr.($)	Cr.($)
Cash-Big Bank	35000
Cash-Little Bank	20000
Equipment	60000
Inventory	85000
Common stock		75000
Notes payable Big Bank		65000
Notes payable - Little Bank		60000
Totals	200000	200000

OPJ Balance Sheet
As of Jan 31, 2019
Amounts in $
Assets
current assets
Cash-Big Bank	35000
Cash-Little Bank	20000
Inventory	85000
Total current assets		140000
Non-current assets
Equipment	60000
Total non-current assets		60000
Total assets		200000
Liabilities
Current liabilities
Notes payable - Little Bank	60000
Total current liabilities		60000
Non-current liabilities
Notes payable Big Bank	65000
Total non-current liabilities		65000
Stockholders equity
Common stock	75000
Total stockholders		75000
Total liabilities and stockholders		200000

problem 2-2

1. True

2. False

3. False

4. True

5. True

6. True

7. True

8. False

9. True

10. False

11. True

12. False

13. True

14. True