Question

Borrowed $4,440 from a local bank on a note due in six months. Received $5,130 cash from investors and issued common stock to them. Purchased $1,500 in equipment, paying $450 cash and promising the rest on a note due in one year. Paid $550 cash for supplies. Bought and received $950 of supplies on account. Prepare a classified balance sheet for Spotlighter, Inc., as of January 31.

Answer 1

Answer:

Classified balance sheet for Spotlighter, Inc., as of January 31.

Assets

Non-Current Assets    

Equipment                                        $1,500  

Total Non-current assets               $1,500

Current Assets

Supplies                                           $1,500

Cash                                                 $8,570

Total current assets                     $10,070

Total Assets                                   $11,570

Equity and Liabilities

Equity

Common Stock                               $5,130

Total Equity                                     $5,130

Liabilities

Accounts Payable                            $950

Note Payable                                 $5,490

Total Liabilities                             $6,440

Total Equity and Liabilities         $11,570

Explanation:

Step 1 :

First Record the Transactions as follows

J1

Cash $4,440  (debit)

Note Payable $4,440 (credit)

J2

Cash $5,130 (debit)

Common Stock $5,130 (credit)

J3

Equipment $1,500 (debit)

Cash $450 (credit)

Note Payable $1,050 (credit)

J4

Supplies $550 (debit)

Cash $550 (credit)

J5

Supplies $950 (debit)

Accounts Payable $950 (credit)

Step 2 :

Post the Account Balances to the Trial Balance as follows

                                                                            Debit          Credit

Cash ($4,440 + $5,130 - $450 - $550)            $8,570

Note Payable ( $4,440 + $1,050)                                         $5,490

Equipment                                                          $1,500

Supplies ($550 + $950)                                    $1,500

Accounts Payable                                                                    $950

Common Stock                                                                      $5,130

Totals                                                                $11,570       $11,570

Step 3 :

After the Trial Balance has been prepared, Financial Statements can then be prepared using the list of Account Balances. Financial Statement include the Balance sheet that has been required for this question.