Question

During the month of January 2015 the following transactions took place:

Jan. 20 Michael McBryan and family invested $80,000 cash in exchange for capital stock.

Jan. 21 On January 21, Overnight Auto Service (Michael McBryan) purchased the land from the city for $52,000 cash.

Jan. 22 Overnight completed the acquisition of its business location by purchasing the abandoned building from the MTA. The purchase price was $36,000; Overnight made a $6,000 cash down payment and issued a 90-day, non-interest-bearing note payable for the remaining $30,000.

Jan. 23 Overnight purchased tools and equipment on account from Snappy Tools. The purchase price was $13,800, due in 60 days.

Jan. 24 Overnight found that it had purchased more tools than it needed. On January 24, it sold the excess tools on account to Ace Towing at a price of $1,800. The tools were sold at a price equal to their cost, so there was no gain or loss on this transaction.

Jan. 26 Overnight received $600 in partial collection of the account receivable from Ace Towing.

Jan. 27 Overnight made a $6,800 partial payment of its account payable to Snappy Tools.

Prepare the journal entries, the general ledger and the balance sheet of Overnight as of January 31, 2015.

Answer 1

Date	General Journal	Debit	credit
Jan 20	Cash	80000
	Capital Stock		80000
	Owners invest cash in the business
Jan 21	Land	52000
	Cash		52000
	Purchased Land for business site
Jan 22	Building	36000
	Cash		6000
	Note payable		30000
	Purchased building. Paid part cash;Balance payable within 90 days
Jan 23	Tools	13800
	Accounts payable		13800
	Purchased tools on account from Snappy Tools.
Jan 24	Accounts Receivable	1800
	Tools		1800
	Sold $1,800 worth of tools on account to Ace Towing.
Jan 26	Cash	600
	Accounts Receivable		600
	Received $600 in partial collection of account receivable from Ace.
Jan 27	Accounts payable	6800
	Cash		6800
	Paid $8600 partial payment of its account payable

Cash
20/01	80000	21/01	52000
26/01	600	22/01	6000
		27/01	6800
		Bal	15800

Capital stock
		20/01	80000
Bal	80000

Land
21/01	52000
		Bal	52000

Notes Payable
		22/01	30000
Bal	30000

Building
22/01	36000
		Bal	36000

Accounts Payable
27/01	6800	23/01	13800
Bal	7000

Tools
23/01	13800	24/01	1800
		Bal	12000

Accounts Receivable
24/01	1800	26/01	600
		Bal	1200

Balance sheet
Assets
Cash	15800
Land	52000
Building	36000
Tools	12000
Accounts Receivable	1200
Total	117000
Liabilities and share capital
Capital Stock	80000
Notes payable	30000
Accounts payable	7000
Total	117000