Question

Deliberate Speed Corporation (DSC) was incorporated as a private company on June 1, 2017. The company’s accounts included the following at June 30, 2017:

Accounts Payable	$	29,000	Land	$	219,000
Factory Building		105,700	Notes Payable, due 2019		5,800
Cash		31,700	Retained Earnings		268,500
Contributed Capital		199,000	Supplies		8,900
Equipment		137,000

During the month of July, the company had the following activities:

1. Issued 3,620 shares for $362,000 cash.
2. Borrowed $128,000 cash from a local bank, payable June 30, 2020.
3. Bought a factory building for $220,000; paid $101,000 in cash and signed a three-year note for the balance.
4. Paid cash for equipment that cost $238,000.
5. Purchased supplies for $35,700 on account.

Required:
1. Analyze transactions (a)–(e) to determine their effects on the accounting equation. (Enter any decreases to account balances with a minus sign.)

2. Record the transaction effects determined in requirement 1 using a journal entry format. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

3. Summarize the journal entry effects from requirement 2 using T-accounts.

4. Prepare a classified balance sheet at July 31, 2017.

5. As of July 31, 2017, has the financing for DSC’s investment in assets primarily come from liabilities or from shareholders’ equity?

• Shareholders’ equity

• Liabilities

Answer 1

Answer