Question

Accurate Builders construction company was incorporated by John Davis. Assume the following activities occurred during the year: a. Received from three investors $70.000 cash and land valued at $45.000; each investor was issued 1.500 shares of common stock with a par value of $0.10 per share. b. Purchased construction equipment for use in the business at a cost of $44.000: one-fourth was paid in cash and the company signed a note for the balance (due in six months). c. Lent $2.500 to one of the investors, who signed a note due in six months. d. John Davis purchased a truck for personal use; paid $6.000 down and signed a one-year note for $27.000. e. Paid $17.000 on the note for the construction equipment in (b) (ignore interest). Required: 1. For each of the preceding transactions, record the effects of the transaction in the appropriate T-accounts. 2. Using the balances in the T-accounts, fill in the following amounts for the accounting equation: 4. Compute the market value per share of the stock. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 4 For each of the preceding transactions, record the effects of the transaction in the appropriate T-accounts. Cash Notes Receivable Beg. Bal 0 Beg. Bal. 0 End. Bal. End. Bal. Equipment Land Beg Bal. Beg. Bal. 0 End. Bal. End. Bal. Notes Payable Common Stock Beg. Bal. 0 Beg. Bal. 0 End. Bal. End. Bal. Additional Paid-in Capital IDA BI

Answer 1

Ans-1

Ref Details Ref Details с Cash Notes Receivable AMOUNT Ref Details AMOUNT 2500 Closing Bal 2500 a Op Bal Cash AMOUNT Ref Details AMOUNT 70000 b Equipment 11000 C Notes Rceeivable 2500 e Notes Payable 17000 Closing Bal 39500 Equipment AMOUNT Ref Details 44000 Closing Bal AMOUNT Ref Details b Purch Ref Details a Op Bal Land AMOUNT Ref Details AMOUNT 45000 Closing Bal 45000 44000 Notes Payable Ref Details AMOUNT Ref Details Cash 17000 b Equipment Closing Bal 16000 AMOUNT 33000 Common Stock Ref Details AMOUNT Ref Details Closing Bal 150 a AMOUNT 150 Op Bal AIP AMOUNT Ref Details Closing Bal AMOUNT Ref Details 114850 a Op Bal 114850

NOTE:

Transaction (d) is a personal transaction of John and hence not to be accounted in Company books.

Ans-2

AMOUNT Ref 39500 DETAILS ASSETS Cash Notes Receivable Equipment Land TOTAL ASSETS 2500 44000 45000 131000A LIABILITIES Notes Payable 16000 B 150 SHAREHOLDERS EQUITY Common Stock Additional Paid Up Cappital TOTAL SHAREHOLDERS EQUITY 114850 115000|C LIABILITIES + SHAREHOLDERS EQUITY 131000(B+C) A = B+C

Ans-3

Market Value per share = Net Assets per Share = (131000 - 16000)/1500 = (115000 / 1500) = 76.67