Question: $2(15$ Marks$)$

Red Rocks Corporation was organized on September $1.$ Red Rocks encountered the following events during the first month of operations.

a$.$ Received $$65,000$ cash from the investors who organized Red Rocks Corporation.

b$.$ Borrowed $$18,000$ cash and signed a note due in two years.

c$.$ Ordered equipment costing $$15,000.$

d$.$ Purchased $$14,000$ in equipment, paying $$2,000$ in cash and signing a six$-$month note for the balance.

e$.$ Received the equipment ordered in $($c$),$ paid for half of it$,$ and put the rest on account.

Required:

$1.$ Summarize the financial effects on the accounting equation of items $($a$)($e$)$ in a table provided below.

$2.$ Prepare journal entries for each transaction in the table provided below.

$3.$ Prepare a classified balance sheet on September $30,$ format provided below.

$1.$ Impact on the Accounting Equation

ASSETS LIABILITIES STOCKHOLDERS EQUITY

Cash Equipment Accounts

Payable Notes payable

$($Short term$)$ Notes payable

$($long term$)$ Common Stock

$2.$ General Journal

Date $/$ no$.$ Account Title Dr Cr

$3.$ Balance Sheet

ASSETS

LIABILITIES

EQUITY

Question: $3(5$ Marks$)$

On March $1,$ a company received a $$30,000$ payment from a customer for maintenance services to be provided over the next three months.

Required:

a$.$ On March $31,$ $$10,000$ of this revenue had been earned. The adjusting entry to record the earned revenue. Show ledgers as well.

b$.$ By April $30,$ another $$10,000$ of this unearned revenue had been earned. Show the adjusting entry to record the earned revenue. Show ledger as well.