Problem 2.4A (Algo) An Alternate Problem on Recording the Effects of Transactions (LO2-3)

The items making up the balance sheet of Phillips Truck Rental at December 31 are listed below in tabular form.

Assets

=

Liabilities

+

Owners' Equity

Cash

+

Accounts Receivable

+

Office Equipment

+

Trucks

=

Notes Payable

+

Accounts Payable

+

Capital Stock

Balances

$9,500

$13,900

$3,800

$68,000

$20,000

$10,200

$65,000

During a short period after December 31, Phillips Truck Rental had the following transactions.

1. Bought office equipment at a cost of $3,100. Paid cash.
2. Collected $5,200 of accounts receivable.
3. Paid $2,500 of accounts payable.
4. Borrowed $10,000 from a bank. Signed a note payable for that amount.
5. Purchased two trucks for $29,000. Paid $15,000 cash and signed a note payable for the balance.
6. Sold additional stock to investors for $83,000.

Required: b. Record the effects of each of the six transactions in the preceding tabular arrangement. (Enter decreases to accounts as a negative.) Assets Liabilities + Cash + + Trucks Owners' Equity Capital Stock $ 65,000 Accounts Receivable $ 13,900 + Office Equipment $ 3,800 Notes Payable $ 20,000 Accounts Payable $ 10,200 December 31 balances $ $ 68,000 1. 9,500 (3,200) 6,300 Balances $ $ 13,900 3,800 $ 68,000 $ 20,000 $ 10,200 65,000 2. Balances 13,900 3,800 68,000 $ 20,000 10,200 65,000 3. Balances $ 13,900 3,800 $ 68,000 $ 20,000 $ 10,200 65,000 4. 5,700 $ 12,000 (2,900) $ 9,100 10,000 $ 19,100 (14,000) $ 5,100 97,000 $ 102,100 Balances $ 13,900 3,800 $ 68,000 20,000 $ 10,200 65,000 5. Balances $ 13,900 $ 3,800 $ 68,000 $ 20,000 $ 10,200 $ 65,000 6. Balances $ 13,900 $ 3,800 $ 68,000 $ 20,000 $ 10,200 $ 65,000