Answer:
Pick-A-Pet, Inc
a. Classified Balance Sheet as of June 30, Year 3:
Assets
Current Assets:
Cash $1,182,600
Accounts Receivable 419,200 $1,601,800
Equipment 58,400
Software 118,500
Logo & Trademarks 421,600 $598,500
Total assets $2,200,300
Liabilities and Equity:
Current Liabilities:
Accounts Payable $ 349,200
Long-term Liabilities:
Long-term Notes Payable $418,900
Total liabilities $768,100
Equity:
Common Stock 962,100
Retained Earnings 470,100 $1,4322,200
Total liabilities + equity $2,200,300
b. Effects of the July transactions on the basic accounting equation:
Assets = Liabilities + Equity
1. Stockholders contribute $300,000 cash for additional ownership shares
Assets (Cash + $300,000) = Liabilities + Equity (Common Stock + $300,000)
2. Company borrows $150,000 in cash from a bank to buy new equipment by signing a formal agreement to repay the loan in 2 years.
Assets (Cash + $150,000) = Liabilities (Long-term Notes Payable + $150,000) + Equity
c. Journal Entries to record the July transactions:
1. Debit Cash $300,000
Credit Common Stock $300,000
To record the additional capital contribution by stockholders.
2. Debit Cash $150,000
Credit Long-term Notes Payable $150,000
To record the borrowing of cash from a bank, repayable in 2 years.
Explanation:
a) Data and Calculations:
Accounts Payable $ 349,200
Accounts Receivable 419,200
Cash 732,600
Common Stock 662,100
Equipment 58,400
Logo and Trademarks 421,600
Long-term Notes Payable 268,900
Retained Earnings 470,100
Software 118,500
July Year 3 Transactions and Effects on accounts:
Cash 732,600
Common Stock 300,000
Notes Payable 150,000
Cash 1,182,600
Common Stock 662,100
Cash 300,000
Common Stock 962,100
Long-term Notes Payable 268,900
Cash 150,000
Long-term Notes Payable 418,900
Modified account balances:
Cash 1,182,600
Accounts Receivable 419,200
Equipment 58,400
Software 118,500
Logo and Trademarks 421,600
Accounts Payable $ 349,200
Long-term Notes Payable 418,900
Common Stock 962,100
Retained Earnings 470,100
