Question

Required information (The following information applies to the questions displayed below.) Deliberate Speed Corporation (DSC) was incorporated as a private company. The company's accounts included the following at June 30: Accounts Payable Buildings Cash Common Stock Equipment Land Notes Payable (long-term) Retained Earnings Supplies $ 28,600 197,000 56,000 230,000 119,000 263,000 6,750 376,850 7,200 During the month of July, the company had the following activities: a. Issued 5,400 shares of common stock for $540,000 cash. b. Borrowed $119,000 cash from a local bank, payable in two years. c. Bought a building for $257,500; paid $90,500 in cash and signed a three-year note for the balance. d. Paid cash for equipment that cost $222,000. e. Purchased supplies for $33,750 on account. 2. Record the transaction effects determined in part 1 using a journal entry format. (If no entry is required for a transaction/event, select "No Journal Entry Required in the first account field.) View transaction list Journal entry worksheet 1 2 3 4 5 > Issued 5,400 shares of common stock for $540,000 cash. Record the transaction. Note: Enter debits before credits. Transaction General Journal Debit Credit a Record entry Clear entry View general Journal

Answer 1

1) Preparation of Journal Entries of Deliberate Speed Corporation for the month of July

Transaction	General Journal	Debit	Credit
a	Cash A/c	$540,000
	Common Stock A/c		$540,000
	[To record issue of Common Stock]
b	Cash A/c	$119,000
	Notes Payable A/c		$119,000
	[To record loan from bank payable in two years]
c	Buildings A/c	$257,500
	Cash A/c		$90,500
	Notes Payable A/c		$167,000
	[To record purchase of Buildings]
d	Equipment A/c	$222,000
	Cash A/c		$222,000
	[To record purchase of Equipment]
e	Supplies A/c	$33,750
	Account Payable A/c		$33,750
	[To record purchase of supplies on account]

2) Journal Entry effects

	Assets	=	LIABILITIES	+	Shareholder's Equity
	Cash	Supplies	Buildings	Equipment	Land	=	Accounts Payable	Notes Payable	+	Common Stock	Retained Earnings
Beg	$56,000	$7,200	$197,000	$119,000	$263,000	=	$28,600	$6,750	+	$230,000	$376,850
a	$540,000					=			+	$540,000
b	$119,000					=		$119,000	+
c	($90,500)		$257,500			=		$167,000	+
d	($222,000)			$222,000		=			+
e		$33,750				=	$33,750		+
End	$402,500	$40,950	$454,500	$341,000	$263,000	=	$62,350	$292,750	+	$770,000	$376,850

3) Preparation of Balance sheet of Deliberate speed Corporation at June 30, Year 3

Deliberate speed Corporation Balance sheet at June 30 Year 3
Particulars	Amount
Current Assets
Cash	$402,500
Supplies	$40,950
Total Current Assets	$443,450
Non-Current Assets
Buildings	$454,500
Equipment	$341,000
Land	$263,000
Total Non-Current Assets	$1,058,500
Total Assets	$1,501,950
Liabilities and Shareholder's Equity
Current Liabilities
Accounts Payable	$62,350
Total Current Liabilities	$62,350
Non-Current Liabilities
Notes Payable	$292,750
Total Non-Current Liabilities	$292,750
Total Liabilities	$355,100
Shareholder's equity
Common Stock	$770,000
Retained Earnings	$376,850
Total Shareholder's Equity	$1,146,850
Total Liabilities and Shareholder's Equity	$1,501,950