Question

Bill Graham and Larry Miller incorporated B&L Landscapes, Inc. on July 1, 2014. The business consists of lawn care and sprinkler system installations. In addition, they also sell two types of fertilizer.

Bill and Larry are concerned about ensuring a steady supply of high-quality PVC pipe for the sprinkler installations jobs they do and have come up with a plan to issue bonds to several of their family members. These funds will enable them to acquire a significant portion of the stock of a local PVC manufacturer.  

At the end of July, 2015, the company has the following adjusted trial balance:  

	Debit	Credit
Cash	$47,750
Accounts Receivable	9,500
Allowance for Doubtful Accounts		400
Prepaid Insurance	1,700
Inventory	59,000
Land	8,000
Building	25,000
Accumulated Depreciation-Building		1,350
Equipment	42,500
Accumulated Depreciation-Equipment		7,500
Accounts Payable		11,500
Notes Payable		45,000
Preferred Stock		5,000
Common Stock		30,000
Retained Earnings		92,700
TOTAL	193,450	193,450

Not included in the adjusted trial balance are the following transactions that occur on July 31, 2015.  

1. B&L Landscapes, Inc. issued $20,000 worth of 5%, 10 year bonds at face value.

2. B&L Landscapes, Inc. purchased 30% of the outstanding common stock of Crestline Pipe, Inc. for $40,000

INSTRUCTIONS:

1. Using the chart of accounts provided below, and the Excel template provided with this assignment, prepare journal entries, in good form, to record the issuance of bonds and the investment transactions. Start with Page 3 of the General Journal. Explanations are optional. Round all journal entries to two decimal places.

2. Post the entries to the general ledger provided. You only need to create ledgers for the accounts in Part 1. Record any existing account balances as beginning balances using the values from the adjusted trial balance.

3. Prepare a classified balance sheet for B&L Landscapes, Inc. for July 31, 2015.

4. On December 15, 2015, Crestline Pipe, Inc. pays a $2,000 dividend. Prepare the journal entry, in good form, to record B&L’s receipt of their share of the dividend. Record this on Page 4 of the General Journal. Explanations are optional.

5. Crestline Pipe, Inc. reports total net income of $11,500 for the year ending December 31, 2015.

6. Record the necessary adjusting journal entries for B&L Landscapes, Inc. investments and bonds on Page 5 of the General Journal. Explanations are optional.

Classification	Acct #	Account Name
Assets	101	Cash
	110	Accounts Receivable
	112	Allowance for Doubtful Accts
	115	Notes Receivable
	116	Interest Receivable
	120	Supplies
	130	Prepaid Insurance
	140	Inventory
	145	Stock Investments
	150	Land
	152	Building
	153	Equipment
	155	Accumulated Depreciation-Building
	156	Accumulated Depreciation-Equipment
Liabilities	201	Accounts Payable
	220	Notes Payable
	225	Interest Payable
	250	Bonds Payable
	280	Dividend's Payable
Stockholders' Equity	301	Common Stock
	310	Preferred Stock
	330	Cash Dividends
	350	Retained Earnings
Revenues	401	Lawn Service Revenue
	410	Sales Revenue
	415	Sales Returns and Allowances
	420	Interest Income
	450	Revenue from Stock Investments
Cost of Goods Sold	501	Purchases
	505	Purchase Returns and Allowances
Expenses	620	Supplies Expense
	630	Fuel Expense
	640	Repair and Maintenance Expense
	650	Advertising Expense
	65	Organization Expense
	660	Insurance Expense
	670	Depreciation Expense
	680	Interest Expense
	690	Bad Debt Expense

BLANK RECORDING SHEETS:

GENERAL JOURNAL

Page:

Date	Description	Acct #	Debit	Credit

GENERAL JOURNAL

Page:

Date	Description	Acct#	Debit	Credit

GENERAL JOURNAL

Page:

Date	Description	Acct #	Debit	Credit

GENERAL LEDGER

Account Account NO.

					BALANCE	BALANCE
Date	Description	Acct #	Debit	Credit	Debit	Credit

GENERAL LEDGER

Account Account NO.

					BALANCE	BALANCE
Date	Description	Acct #	Debit	Credit	Debit	Credit

GENERAL LEDGER

Account Account NO.

					BALANCE	BALANCE
Date	Description	Acct #	Debit	Credit	Debit	Credit

BALANCE SHEET:

B&L Landscapes, INC.

Balance Sheet

July 31, 2015

Answer 1

Answer to first 4 parts only as per policy