Question

need help on part 3 of PA2-1

CHAPTER 2 The E GROUP A PROBLEMS connect LO 2-2,2 PA2-1 Determining Financial Statement Effects of various Transactions Mallard Incorporated (MT) is a small manufacturing company that makes model trains to sell to toy stores. It has a small service department that repairs customers' trains for a fee. The company has been in business for five years. At the end of the previous year, the accounting records reflected total assets of $500,000 and total liabilities of $200,000. During the current year, the following summarized events occurred: Issued additional shares of common stock for $100,000 cash. b. Borrowed $120,000 cash from the bank and signed a 10-year note. Built an addition on the buildings for $200,000 and paid cash to the contractor. d. Purchased equipment for the new addition for $30,000, paying $3,000 in cash and signing a note for the balance due in two years. Returned a $3,000 piece of equipment from (d), because it proved to be defective; received a reduction of the notes payable. f. Purchased a delivery truck (equipment) for $10,000; paid $7,000 cash and signed a two-year note for the remainder. 8 A stockholder sold $5,000 of his stock in Mallard Incorporated to his neighbor. C. e. Required: + 1. Complete the spreadsheet that follows, using plus (+) for increases and minus (-) for decreases for each account. The first transaction is used as an example. Assets Liabilities Stockholders' Equity Common Retained Cash Equipment Buildings = Notes Payable Stock Earnings (a) +100,000 +100,000 2. Did you include event (8) in the spreadsheet? Why or why not? 3. Based on beginning balances plus the completed spreadsheet, provide the following amounts (show computations): a. Total assets at the end of the year. b. Total liabilities at the end of the year. c. Total stockholders' equity at the end of the year. 4. As of the current year-end, has the financing for MI's investment in assets primarily come from liabilities or stockholders' equity? PA2-2 Recording Transactions (in a Journal and T-Accounts); Preparing a Trial Balance; Preparing and Interpreting the Balance Sheet Deliberate Speed Corporation (DSC) was incorporated as a private company. The company's accounts included the following at June 30:

Answer 1

3. (a)

Total assets account
Debit	Credit
To opening bal	5,00,000	By (Note 2 years)		3,000
To Cash(Bulidling)	2,00,000	(Euipment returned)
To cash (equipment)	3,000
To note 2years(equipment)	27,000
To equipment(Truck)	10,000	By closing balance		7,47,000
To cash	10,000
	7,50,000			7,50,000

3. ( b )

Total liablites account
Debit	Credit
TO equipment (returned)note	3,000	By opening bal ( given)		2,00,000
		By Bank (note 10 years)		1,20,000
		By equipment (note 2 yerars)		27,000
		By truck ( note 2years)		3000
To closing balance	3,47,000
	350000			3,50,000

3. ( C )

Total stock holders equity
Debit	Credit
		By opening bal ( given)
		Total assaets - liablities = equity
		( 500,000 -200,000 )		3,00,000
By closing balance	4,00,000	By cash ( additional shares)		1,00,000
	4,00,000			4,00,000

Notes

1. Stock holder sold his stock 5000 will not effect company financials

2. Cash = 100,000 (addtional share) + 120,000 ( note) - 200,000 ( bulidling ) - 3000 ( equipment ) - 7000 ( truck ) = 10,000

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