Whitley Products Corporation begins operations on April 1. The firm engages in the following transactions during April:

Question:

(1) Issues 25,000 shares of $10 par value common stock for $15 per share in cash.

(2) Acquires land costing $25,000 and a building costing $275,000 by paying $50,000 in cash and signing a note payable to a local bank for the remainder of the purchase price.

(3) Acquires equipment costing $125,000 for cash.

(4) Pays $2,800 to transport the equipment to the office of Whitley Products Corporation.

U.S. GAAP treats the cost to transport the equipment as part of the acquisition cost of the equipment.

(5) Pays $3,200 to install and test the equipment. U.S. GAAP treats the cost to install and test the equipment as part of the acquisition cost of the equipment.

(6) Pays the one-year premium of $12,000 for property and liability insurance on the building and equipment for coverage beginning May 1.

(7) Agrees to manufacture custom-ordered merchandise for a particular customer beginning in May at a selling price of $15,000. The customer advances $1,500 of the selling price with the order.

(8) Orders raw materials costing $60,000 from various suppliers.

(9) Receives notification from the suppliers that the raw materials ordered in transaction

(8) Were shipped. The merchandise belongs to the suppliers until received by Whitley

Products Corporation.

(10) Receives the raw materials shipped in transaction (9).

(11) Discovers that raw materials costing $8,000 are damaged and returns them to the supplier.

The firm has not yet paid the supplier.

(12) Pays the raw materials suppliers in transactions (8), (9), (10), and (11) the amounts due, after subtracting 2% for prompt payment. The firm treats cash discounts as a reduction in the acquisition cost of the raw materials.

a. Enter these twelve transactions in T-accounts.

b. Prepare a balance sheet for Whitley Products Corporation as of April 30.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... GAAP
Generally Accepted Accounting Principles (GAAP) is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC). While the SEC previously stated that it intends to move from U.S. GAAP to the International Financial Reporting Standards (IFRS), the... Balance Sheet
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... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...