Penny Cassidy has decided to start her business, Penny's Pool Service & Supply, Incorporated (PPSS). There is
Question:
Penny Cassidy has decided to start her business, Penny's Pool Service & Supply, Incorporated (PPSS). There is much to do when starting a new business. Here are some transactions that have occurred in Pess in March
a. Received $43,000 cash and a large delivery van with a value of $54,000 from Penny, who was given 5,800 shares of $0.05 par value common stock in exchange.
Purchased land with a small office and warehouse by paying $19,000 cash and signing a 10-year note payable to the local bank for $89,000. The land has a value of $27,000 and the building's value is $81,000. Use separate accounts for land and buildings
Purchased new computer equipment from Dell for $4.300 cash, and purchased other office equipment for $5.800. signing a note pavable due in six months to the office equipment manufacturer.
d. Hired a receptionist for the office at a salary of $3,300 per month; the receptionist will begin working for PPSS starting in April.
raid $2,800 on the note payable to the bank in b above at the end of March ignore interest.
- Purchased short-term investments in the stock of other companies for $6.800 cash.
- Ordered $28,000 in inventory from Pool Corporation, Incorporated, a pool supply wholesaler, to be received in April.
required:
- Use the tollowing -accounts. and post each of the transactions to determine balances at March 31. Because this is a new business beginning balances are $0.
- create a trial balance on March 31 to check that debits equal credits after the transactions are posted to the T-accounts
- From the trial balance. prepare a classified balance sheet at March 31 (before the beginnina of operations in Abril
- For each of the events. indicate if it is an Investing activitv. rinancing activity or No Eifect. and amount of the effect on cash flows.
- Calculate the current ratio at March 31
Financial Accounting
ISBN: 978-1259105692
6th Canadian edition
Authors: Robert Libby, Patricia Libby, Daniel G Short, George Kanaan, Maureen Sterling