Jonah Lee established Lee Delivery Company in 2010. The following transactions occurred during the year: (a) Received $90,000 cash from
Jonah Lee established Lee Delivery Company in 2010. The following transactions occurred during the year:
(a) Received $90,000 cash from Jonah Lee, the sole owner.
(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 the rest (ignore interest).
(d) Sold one-fourth of the land for $3,000 to Birkins Moving, which signed a note agreeing to pay Lee Delivery Company in six months (ignore interest).
(e) Paid $52,000 cash to construct a garage for the trucks.
(f) Jonah Lee paid $122,000 cash for land for his personal use.
1. Analyze each item for its effects on the financial statements of Lee Delivery Company for the year ended December 31, 2010. Transaction (a) is presented as an example:
2. Record the effects of each item into a journal entry, using the simplified journal entry format shown in the chapter.
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 Lee Delivery Company on December 31, 2010.
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... 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...
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