Question

Assume Downer.com was organized on May 1, to compete with Despair, inca company that sells demotivational posters and office products. The following events occurred during the first month of Downer.com's operations a Received $89,000 cash from the investors who organized Downer.com Corporation b Borrowed $25,500 cash and signed a note due in two years c Ordered computer equipment costing $12,000 d. Purchased $8.500 in equipment, paying $3,100 in cash and signing a six-month note for the balance e Received the equipment ordered in 19. paid for half of it and put the rest on account Required: 1. For each of the events through (e. perform transaction analysis and indicate the amount of effect on the accounting equation (Enter any decreases to account balances with a minus sign) Cash Equipment Accounts Payable ST Notes Payable Shareholders Equity Contributed Capital Beg Payable b d End 2. Prepare journal entries for each transaction. If no entry is required for a transaction event, select "No Journal Entry Required in the first account field.) Prey 1 of 5 Nad > е DOLL

Answer 1

Asset Liablities + Shareholders Equity Cash Equipment Acc Payable ST note payable LT note payable Common stock a $ $ $ 89,000 89,000 25,500 b $ 25,500 с d $ 5,400 $ $ (3,100) $ (6,000) $ 8,500 12,000 e $ 6,000 Bal $ 105,400 $ 20,500 $ 6,000 $ 5,400 $ 25,500 $ 89,000 Total Asset $ 125,900 $ 125,900 Total Liablity and equity

Date Account Ref. Debit Credit a Cash Common Stock $ 89,000 $ 89,000 b $ 25,500 Cash ST note payable $ 25,500 С No entry required d $ $ 8,500 Equipment Cash ST note payable $ $ 3,100 5,400 $ (D $ 12,000 Equipment Cash Account Payable $ $ 6,000 6,000

Balance Sheet Liablities Asset Current Asset Cash Total current asset Current Liablities $ 105,400 Account Payable $ 105,400 ST note payable Total current liablities LT note payable 20500 Total Liablities $ $ $ $ $ 6,000 5,400 11,400 25,500 36,900 Non-current asset Equipment Shareholders equity Common stock Total Shareholders equity $ $ 89,000 89,000 Total Asset $ 125,900 Total liablity&Shareholders equity $ 125,900

Transaction (C) is not to be entered because the financial transaction has not yet occured.