Demers Real Estate Co. experienced the following events during the organizing phase and its first month of operations. Some of
Demers Real Estate Co. experienced the following events during the organizing phase and its first month of operations. Some of the events were personal for the stockholders and did not affect the business. Others were transactions of the business.
Nov 4 David Demers, the major stockholder of real estate company, received $100,000 cash from an inheritance.
5 Demers deposited $57,000 cash in a new business bank account titled Demers Real Estate Co. The business issued common stock to Demers.
6 The business paid $600 cash for letterhead stationery for the new office.
7 The business purchased office equipment. The company paid cash of $12,000 and agreed to pay the account payable for the remainder, $8,000, within three months.
10 Demers sold EVN stock, which he had owned for several years, receiving $76,500 cash from his stockbroker.
11 Demers deposited the $76,500 cash from sale of the EVN stock in his personal bank account.
12 A representative of a large company telephoned Demers and told him of the company s intention to transfer $15,500 of business to Demers.
18 Demers finished a real estate deal for a client and submitted his bill for services, $3,500. Demers expects to collect from the client within two weeks.
21 The business paid half its account payable on the equipment purchased on November 7.
25 The business paid office rent of $1,300.
30 The business declared and paid a cash dividend of $1,900.
1. Classify each of the preceding events as one of the following:
a. A business-related event but not a transaction to be recorded by Demers Real Estate Co.
b. A business transaction for a stockholder, not to be recorded by Demers Real Estate Co.
c. A business transaction to be recorded by Demers Real Estate Co.
2. Analyze the effects of the preceding events on the accounting equation of Demers Real
3. Record the transactions of the business in its journal. Include an explanation for each entry.
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... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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