Question

Deliberate Speed Corporation (DSC) was incorporated as a private company on June 1, 2017. The company's accounts included the following at June 30, 2017: Accounts Payable Factory Building Cash Contributed Capital Equipment $21,800 103,300 29, 300 191,00 129, eee Land Notes Payable, due 2019 Retained Earnings Supplies $ 211,000 4,200 264,500 8,100 During the month of July, the company had the following activities: a. Issued 3,780 shares for $378,000 cash. b. Borrowed $112.000 cash from a local bank, payable June 30, 2020. Bought a factory building for $204.000; paid $93,000 in cash and signed a three-year note for the balance. d. Paid cash for equipment that cost $222,000. e. Purchased supplies for $33,300 on account. Required: 1. Analyze transactions (a)–(e) to determine their effects on the accounting equation (Enter any decreases to account balances with a minus sign.) Transaction Assets Liabilities Shareholders' Equity b. d. e.

Answer 1

1.

Transaction	Assets	Amount	=	Liability	Amount	+	Shareholders equity	Amount
a.	Cash	378,000	=				Contributed Capital	378,000
b.	Cash	112,000	=	Loan	112,000
c.	Factory	204,000	=	Account Payable	111,000
	Cash	(93,000)	=
d.	Equipment	222,000	=
	Cash	(222,000)	=
e.	Supplies	33,300	=	Account Payable	33,300

2.Journal entry

S. No.	Particulars	Dr Amount ($)	Cr Amount ($)
a.	Cash A/c Dr	378,000
	To Contributed Capital A/c		378,000
b.	Cash A/c Dr	112,000
	To Loan A/c		112,000
c.	Factory Building A/c Dr	204,000
	To Cash A/c		93,000
	To Account Payable A/c		111,000
d.	Equipment A/c Dr	222,000
	To Cash A/c		222,000
e.	Supplies A/c Dr	33,300
	To Account Payable A/c		33,300

3. T-account

Cash A/c
Beg. Bal.	29,300	93,000	Factory Building
Capital	378,000	222,000	Equipment
Loan	112,00	204,300	End. Bal.
	519,300	519,300

Account Payable A/c
End. Bal.	165,300	21,000	Beg. Bal.
		33,300	Supplies
		111,000	Factory Building
	165,300	165,300

Supplies A/c
Beg. Bal.	8,100	41,400	End Bal.
Account Payable	33,300
	41,400		41,400

Factory Building A/c
Beg. Bal.	103,300	307,300	End. Bal.
Cash	93,000
Account Payable	111,000
	307,300	307,300

Equipment A/c
Beg. Bal.	129,000	351,000	End. Bal.
Cash	222,000
	351,000		351,000

Land A/c
Beg. Bal.	211,000	211,000	End. Bal.
	211,000	211,000

Retained earning A/c
End. Bal.	264,500	264,500	Beg. Bal.
	264,500	264,500

Note Payable A/c
End. Bal.	4,200	4,200	Beg. Bal.
	4,200	4,200

Contributed Capital A/c
End. Bal.	569,000	191,000	Beg. bal.
		378,000	Cash
	569,000	569,000

4. Balance Sheet

DELIBERATE SPEED CORPORATION
BALANCE SHEET
AT JULY 31, 2017
ASSETS	AMOUNT ($)	LIABILITIES	AMOUNT ($)
Cash	204,300	Notes Payable	4,200
Factory Building	307,300	Account Payable	165,300
Land	211,000	Loan from Bank	112,000
Equipment	351,000	EQUITY :
Supplies	41,400	Contributed Capital	569,000
		Retained earning	264,500
	11,15,000		11,15,000