Question

The following transactions occurred for Lantana Company during its first month of operations and have been recorded in the T-accounts.
a. Received $50,000 cash from owners in exchange for common stock.
b. Purchased land for $20,000, paid $5,000 in cash and signed a 2-year note for the remainder.
c. Bought $900 of supplies on account.
d. Purchased $10,000 of equipment, paying cash.
e. Paid $500 on account for supplies purchased in transaction (c).
Required:

1. Determine the T-account balances.

2. Using the information in the transactions, prepare a classified balance sheet for Lantana Company.

(List long-term assets in alphabetical order)

Answer 1

Answer:

1. T-account balances.

Common stock

$50,000

Land

$20,000

Cash

$34,500

Note Payable

$15,000

Supplies

$900

Trade Payable

$400

Equipment

$10,000

2. A classified balance sheet for Lantana Company

Non - Current Assets

Land                                     $20,000

Equipment                            $10,000

Total Non - Current Assets $30,000

Current Assets

Supplies                                    $900

Cash                                     $34,500

Total Current Assets           $35,400

Total Assets                         $65,400

Equity and Liabilities

Equity

Common stock                   $50,000

Total Equity                         $50,000

Current Liabilities

Trade Payable                         $400

Total Current Liabilities           $400

Non - Current Liabilities

Note Payable                     $15,000

Total Non - Current Liabilities  $15,000

Total Equity and Liabilities $65,400

Explanation:

T-account balances.

Common stock

$50,000

Land

$20,000

Cash

$50,000 - $5,000 - $10,000 - $500 = $34,500

Note Payable

$15,000

Supplies

$900

Trade Payable

$900 - $500 = $400

Equipment

$10,000