Athletic Performance Company (APC) was incorporated as a private company. The company€™s accounts included the following at July 1:

During the month of July, the company had the following activities:
a. Issued 2,000 shares of common stock for $ 200,000 cash.
b. Borrowed $ 30,000 cash from a local bank, payable in two years.
c. Bought a building for $ 141,000; paid $ 41,000 in cash and signed a three- year note for the balance.
d. Paid cash for equipment that cost $ 100,000.
e. Purchased supplies for $ 10,000 on account.
Required:
1. Analyze transactions (a)€“(e) to determine their effects on the accounting equation. Use a spreadsheet format with a column for each account, enter the July 1 amounts in the first line under the account headings, and calculate ending balances as shown in Exhibit 2.5.
2. Record the transaction effects determined in requirement 1 using journal entries.
3. Summarize the journal entry effects from requirement 2 using T- accounts.
4. Prepare a trial balance at July 31.
5. Prepare a classified balance sheet at July 31.
6. As of July 31, has the financing for APC€™s investment in assets primarily come from liabilities or stockholders€™ equity?

Transcribed Image Text:

Accounts Payable Building Cash Common Stock Equipment $ 4,000 Land 200,000 Notes Payable (long-term) $90,000 17,000 16,000 Retained Earnings 308,000 Supplies 18,000