Question

Accurate Builders construction company was incorporated by John Davis. Assume the following activities occurred during the year:

1. Received from three investors $58,000 cash and land valued at $33,000; each investor was issued 1,000 shares of common stock with a par value of $0.10 per share.
2. Purchased construction equipment for use in the business at a cost of $53,000; one-fourth was paid in cash and the company signed a note for the balance (due in six months).
3. Lent $3,000 to one of the investors, who signed a note due in six months.
4. John Davis purchased a truck for personal use; paid $6,900 down and signed a one-year note for $31,500.
5. Paid $21,500 on the note for the construction equipment in (b) (ignore interest).

Required:

1. For each of the preceding transactions, record the effects of the transaction in the appropriate T-accounts.

2. Using the balances in the T-accounts, fill in the following amounts for the accounting equation:

4. Compute the market value per share of the stock.

Additional Paid-in Capital Beg. Bal. 0 (a) End. Bal.

Answer 1

Cash 11 1) 12 13 Beg 14 a) 15 0 58,000.00 13250 b) 21500 e) 3000 c) Beg. c) Notes Receivables 0 3000 Beg. (b) Equipment 0 53000 20,250.00 End. 3000 End 53000 16 End. 17 18 Land Notes Payable 19 Beg. 0 33,000.00 33000 Common Stock o Beg 300 a) 300 End e) o Beg. 39750 (6) 18250 End 21500 20 a) 21 End. 22 23 24 Additional paid in capital o Beg. 90,700.00 (a) 90,700.00 End 25 26 27 2) 28 Assets 29 30 + Liabilities $ 18,250.00 + Shareholders' equity $ 91,000.00 O 109,250.00 3) Since transaction (d) is a personal purchase, not purchased by Accurate Builders, thereis no effect on the business due to the 31 separate entity assumption. 324) Market value of share = Market value per share = total received: number of shares issued = 33 $91000/3000 shares $ 30.33 per share


с D E F G H 1 =53000 1/4 21500 3000 b) e) Beg. c) А B 8 1. For each of the preceding transactions, record the effects of the tra 9 2. Using the balances in the T-accounts, fill in the following amounts 10 4. Compute the market value per share of the stock. 11 1) 12 Cash 13 Beg. 0 14 a) 58000 15 16 End. =B14-C13-C14-C15 17 18 Land 19 Beg. 0 20 a) 33000 21 End. =B20 22 23 Additional paid in capital Notes Receivables 0 3000 End. =G14 Notes Payable e) 21500 0 =53000-C13 I=H20-620 Beg. (b) End 24 25 10 =B14+B20-L20 =C24+C25 Beg. (a) End 26 27 2) 28 Assets 29 =B16+G16+L16+B21 30 + Liabilities =H21 Shareholders' equity =L21+C26 + 3) Since transaction (d) is a personal purchase, not purchased by Accurate Builders, thereis no effect on the business due to the 31 separate entity assumption. 32 4) Market value of share = Market value per share = total received : 33 number of shares issued = $91000/3000 shares 34 =E29/3000 per share