Question Requirements:
1. Record the transaction. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal
2. Show the effects of the journal entries by account, using the T-account Cash Equipment Beg. Bal Beg. Bal End. Bal End. Bal Land Notes Payable Beg. Bal Beg. Bal. End. Bal. End. Bal. Common Stock Beg. Bal End. Bal
3. Extract a Trial Balance.
4. Prepare a classified balance sheet for Laser Delivery Services, Inc., at the end of December. Enter Retained earnings with a zero balance in the appropriate section. LASER DELIVERY SERVICES, INC Balance Sheet.
Answer:
1. Journal Entries
Debit Credit
A. Cash $37,000
Common Stock $37,000
To record issue of common stock.
B. Land $14,000
Note Payable $14,000
To record purchase of land for note payable.
C. Vehicles $18,000
Cash $3,500
Notes Payable $14,500
To record purchase of delivery trucks by cash and notes payable.
D. Vehicles Repairs $1,800
Cash $1,800
To record vehicle repair.
E. No journal entry required
2. Leger Accounts:
a) Cash Account
Debit Credit Balance
A. Common Stock $37,000 $37,000
C. Vehicles $3,500 $33,500
D. Vehicle Repair 1,800 $31,700
b) Common Stock
Debit Credit Balance
A. Cash $37,000 $37,000
c) Land
Debit Credit Balance
B. Notes Payable $14,000 $14,000
d) Notes Payable
Debit Credit Balance
B. Land $14,000 $14,000
C. Vehicles $14,500 $28,500
e) Vehicles
Debit Credit Balance
C. Cash $3,500 $3,500
C. Notes Payable $14,500 $18,000
D. Cash $1,800 $19,800
3. Trial Balance as at December 31:
Debit Credit
Cash $31,700
Common Stock $37,000
Land $14,000
Notes Payable $28,500
Vehicles $19,800
Total $65,500 $65,500
4. Balance Sheet as at December 31:
Assets:
Current Assets:
Cash 31,700 31,700
Long-Term Assets:
Land 14,000
Vehicles 19,800 33,800
Total Assets $65,500
Liabilities + Equity:
Liabilities:
Notes Payable 28,500
Common Stock 37,000
Total Liabilities + Equity $65,500
Explanation:
a) The General journal records the transactions as they occur on a daily basis, showing the accounts to be debited and the ones to be credited.
b) The house bought by Stockholder Jonah Lee is a personal transaction that does not relate to the company. The entity concept that separates ownership from the business does not allow such personal transactions to be recorded in the accounting records of a company.
c) The balance sheet shows the assets and the owners of the financial resources used to acquire the assets. It is always in balance, with assets equalling the liabilities and equity with the occurrence of each transaction.