Question

Chapter 3. Problem 1PSA Bookmark Show all steps: ON Problem Glenn Grimes is the founder and president of Heartland Construction, a real estate development venture. The business transactions during February while the company was being organized are listed as follows Feb. 1 Grimes and several others invested $600,000 cash in the business in exchange for 30,000 shares of capital stock. Feb. 10 The company purchased office facilities for $360,000, of which $120,000 was appli cable to the land and $240,000 to the building. A cash payment of $72,000 was made and a note payable was issued for the balance of the purchase price Feb. 16 Computer equipment was purchased from PCWorld for $14,400 cash. Feb. 18 Office furnishings were purchased from Hi-Way Furnishings at a cost of $10,800. A $1.200 cash payment was made at the time of purchase, and an agreement was made to pay the remaining balance in two equal installments due March 1 and April 1. Hi- Way Furnishings did not require that Heartland sign a promissory note. Feb. 22 Office supplies were purchased from Office World for $360 cash. Feb. 23 Heartland discovered that it paid too much for a computer printer purchased on February 16. The unit should have cost only $359, but Heartland was charged $395. PCWorld promised to refund the difference within seven days. Feb. 27 Mailed Hi-Way Furnishings the first installment due on the account payable for office furnishings purchased on February 18. Feb. 28 Received $36 from PC World in full settlement of the account receivable created on February 23. Instructions a. Prepare journal entries to record these transactions. Select the appropriate account titles from the following chart of accounts. Cash Accounts Receivable Office Supplies Office Furnishings Computer Systems a Land Office Building Notes Payable Accounts Payable Capital Stock chmann.comans assets B and owners.com

Answer 1

a)	Date	Account NAME	Debit	Credit
	Feb 1	Cash	600000
		Capital Stock		600000
		(being capital stock issued in cash)
	Feb. 10	Land	120000
		Office Building	240000
		Cash		72000
		Note Payable		288000
		(being land and building purchased for cash and notes)
	Feb. 16	Computer Systems	14400
		Cash		14400
		(being computer purchased)
	Feb. 18	Office Furnishings	10800
		Cash		1200
		Accounts Payable		9600
		(being offices furninshings purchased partially in cash and credit)
	Feb. 22	Office Supplies	360
		Cash		360
		(being office supplies purchased)
	Feb. 23	Account Receivable	36
		Computer System		36
		(being amount due to be refunded back)
	Feb . 27	Account Payable	4800
		Cash		4800
		(being installment paid on due date)
	Feb. 28	Cash	36
		Account Receivable	36
		(being refund received)
b)	Transaction	Assets                        =	Liabilities          +	Owner's Equity
	Feb 1	+ 600000 cash		+ 600000 Capital Stock
	Feb. 10	+ 120000(Land) + 240000 (Office building) - 72000(CASH)	+ 288000(Note Payable)
	Feb. 16	+ 14400 ( Computer System) - 14400 (Cash)
	Feb. 18	+ 10800 (Office Furninshing) - 1200 (Cash)	+ 9600 (Accounts Payable)
	Feb. 22	-360 (Cash )		- 360 (OFFICE SUPPLIES)
	Feb. 23	+36 (Account Receivable) -36 (Computer Sysytem)
	Feb . 27	-4800 (Cash)	+ 4800 (Account Payable)
	Feb. 28	+36 (Cash)   - 36 (Account Receivable)