Question

HOMEWORK #2 Due September 18, 5:00 pm 10 points Sparty Corporation has been operating for two years. The December 31, 2018 account balances are: Cash $250,000 Accounts Payable $170,000 Accounts Receivable 70,000 Salaries Payable 50,000 Inventory 30,000 Long Term Notes Payable 180,000 Short-term Investments 20,000 Contributed Capital 220,000 Equipment 180,000 Retained Earnings 140,000 Land 210,000 During the year 2019, the company had the below activities. Note that none of these activities should impact the income statement, only the balance sheet; we are assuming for simplicity that the company had no revenues or expenses during 2019. a. Collected $20,000 cash on open accounts receivable from customers. b. Bought additional inventory for $5,000 on account. c. Received a $60,000 loan from the bank, payable in four years. Ignore interest. d. Purchased additional short-term investments for $10,000 cash. e. Returned some defective inventory to a supplier for a full cash refund of $3,000. f. Ordered supplies worth $9,000 from Concord Supplies to be delivered next month. g. Paid off $30,000 of notes payable early. Ignore interest. h. Purchased additional equipment costing $40,000; paying $20,000 in cash and signing a promissory note (i.e., a note payable) to pay the balance in three years. i. Issued additional shares of stock, receiving $90,000 in cash from investors. j. Paid off $40,000 of salaries owed from the prior year.

Is this too much? I thought 1-6 to be more like steps then, individual questions. If it is can you do the 1st and 2nd part/questions with an explanation, please and thank you.

Answer 1

Prepare journal entry as follows:

Event	Accounts	Debit	Credit
a)	Cash [+A]	$20,000
	Accounts receivable [- A]		$20,000
b)	Inventory [+A]	$5,000
	Accounts payable [+L]		$5,000
c)	Cash [+A]	$60,000
	Long term notes payable [+L]		$60,000
d)	Short-term investments [+A]	$10,000
	Cash [-A]		$10,000
e)	Accounts payable [-L]	$3,000
	Cash [-A]		$3,000
f)	No entry
g)	Long term notes payable [-L]	$30,000
	Cash [-A]		$30,000
h)	Equipment [+A]	$40,000
	Cash [-A]		$20,000
	Long term notes payable [+L]		$20,000
i)	Cash [+A]	$90,000
	Contributed capital [+E]		$90,000
j)	Salaries payable [-L]	$40,000
	Cash [-A]		$40,000

_____________________________________________________

Prepare T-accounts as follows:

Accounts receivable Beg. Bal. $70,000 a) $20,000 Beg. Bal a) c) 1) Cash $250,000 d) $20,000 e) $60,000 g) $90,000 h) D $10.000 $3.000 $30,000 $20,000 $40,000 End. Bal. $50,000 End. Bal. $317,000 Inventory Beg. Bal. $30,000 b) $5,000 Beg. Bal d) Short-term investments $20,000 $10,000 End. Bal. $35,000 End. Bal. $30.000

Equipment $180,000 $40,000 Land Beg. Bal. $210,000 Beg Bal. h) End. Bal. $210,000 End. Bal. $220,000 Accounts payable $3,000 Beg. Bal. $170,000 b) $5,000 Salaries payable $40,000 Beg. Bal. $50,000 D End. Bal. $172.000 End. Bal. $10,000 Long term notes payable $30.000 Beg. Bal. $180,000 c) $60,000 h) $20.000 Contributed capital Beg. Bal. S220.000 1) $90.000 End. Bal. $310,000 End. Bal. $230,000

____________________________________________________

Cash Accounts receivable Inventory Short-term investment Equipment Land Accounts payable Salaries payable Long term notes payable Contributed capital Retained Earnings Trial Balance Debit Credit $317,000 $50,000 $35,000 $30,000 $220,000 $210.000 $172,000 $10.000 $230,000 $310.000 $140.000 $862,000 $862,000

___________________________________________________

Balance Sheet
Assets:
Cash	$317,000
Accounts receivable	$50,000
Inventory	$35,000
Short-term investment	$30,000
Equipment	$220,000
Land	$210,000
Total Assets		$862,000
Liabilities:
Accounts payable	$172,000
Salaries payable	$10,000
Long term notes payable	$230,000
Total Liabilities		$412,000
Stockholders' Equity
Contributed capital	$310,000
Retained Earnings	$140,000
Total Stockholders' Equity		$450,000
Total Liabilities and Stockholders' Equity		$862,000