Question

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 $292,500, of which $97,500 was applicable to the land and $195,000 to the building. A cash payment of $58,500 was made and a note payable was issued for the balance of the purchase price. Feb. 16 Computer equipment was purchased from PCWorld for $10,700 cash. Feb. 18 office furnishings were purchased from Hi-Way Furnishings at a cost of $9,750. A $975 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 $315 cash. Feb. 23 Heartland discovered that it paid too much for a computer printer purchased on February 16. The unit should have cost only $340, but Heartland was charged $385. 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 $45 from PCWorld in full settlement of the account receivable created on February 23.

Answer 1

DATE GENERAL JOURNAL DEBIT $ CREDIT $ FEB 1 CASH DR $ 600,000 TO CAPITAL STOCK $ 600,000 (BEING THE MONEY INVESTED IN BUISNESS IN THE EXCHANGE 430,000 SHARE) FEBIO LAND DR $97,500 OFFICE BUILDING DR $ 195,000 TO CASH [$ 58,500 TO NOTE PAYABLE € $234,000 (BEING THE OFFICE FACILITIES PURCHASED ON CASH AND ON NOTES PAYABLE) FEB 16 ( COMPUTER SYSTEM DR $ 19,900 TO CASH 10.700 (BEING COMPUTER SYSTEN IS PURCHASED FROM PC WORLO) FEB 18 OFFICE FURNISHING |$9,750 $ 975 $ 8,175 TO CASM TO ACCOUNTS PAYABLE BEING THE OFFICE FURNISHING PURCHASED ON CASH AND ON ACCOUNTS PAYABLE)

FEB 22 OFFICE SUPPLIES OR $ 315 TO CASH $315 (BEING THE Office Supplies PURCHASED INCASH) FEB 23 ACCOUNTS RECEIVABLE $ 45 To COMPUTER SYSTEM $45 (BEING THE REFUND FROM PC WORLD DISCOVERED) FEB 27 ACCOUNTS PAYABLE DR $4389.5 ITO CASH 94387.5 (BEING THE FIRST INSTALLMENT TO HI-WAY FURNISHING IS PAID) $ 45 $45 FEB 28 CASH ACCOUNT DR TO ACCOUNTS RECEIURBLE (BEING THE REFUND FROM PC WORLD IS RECEIVED