Lakeshore Cottages was incorporated as a private company on January 1, 2017. The companys accounts included the
Question:
Lakeshore Cottages was incorporated as a private company on January 1, 2017. The company’s accounts included the following at January 31, 2017:
During the month of February, the company had the following activities:
a. Borrowed $150,000 cash from a local bank, payable June 30, 2020
b. Repaid $250,000 cash to a local bank
c. Issued 1,500 shares for $150,000 cash
d. Purchased equipment for $30,000, paying $3,000 in cash and signing a note due in six months for the balance
e. Purchased supplies for $30,000 on account
Required:
1. Analyze transactions (a) through (e) to determine their effects on the accounting equation. Use the format shown in the demonstration case.
2. Record the transaction effects determined in requirement 1 using a journal entry format.
3. Summarize the journal entry effects from requirement 2 using T-accounts.
4. Prepare a classified balance sheet at February 28, 2017.
5. As of February 28, 2017, has the financing for Lakeshore Cottages’ investment in assets primarily come from liabilities or from shareholders’ equity?
Balance SheetBalance 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...
Step by Step Answer:
Fundamentals of Financial Accounting
ISBN: 978-1259269868
5th Canadian edition
Authors: Fred Phillips, Robert Libby, Patricia Libby, Brandy Mackintosh