Laser Delivery Services, Inc. (LDS) was incorporated January 1. The following transactions occurred during the year: a.
Question:
a. Received $ 40,000 cash from the company€™s founders in exchange for common stock.
b. Purchased land for $ 12,000, signing a two- year note (ignore interest).
c. Bought two used delivery trucks at the start of the year at a cost of $ 10,000 each; paid $ 2,000 cash and signed a note due in three years for $ 18,000 (ignore interest).
d. Paid $ 2,000 cash to a truck repair shop for a new motor, which increased the cost of one of the trucks.
e. Stockholder Jonah Lee paid $ 300,000 cash for a house for his personal use.
Required:
1. Analyze each item for its effects on the accounting equation of LDS for the year ended December 31.
2. Record the effects of each item using a journal entry.
3. Summarize the effects of the journal entries by account, using the T- account format shown in the chapter.
4. Prepare a classified balance sheet for LDS at December 31.
5. Using the balance sheet, indicate whether LDS€™s assets at the end of the year were financed primarily by liabilities or stockholders€™ equity.
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Fundamentals of Financial Accounting
ISBN: 978-0078025914
5th edition
Authors: Fred Phillips, Robert Libby, Patricia Libby
Question Posted: