Question

In: Accounting

  Cash $ 80 Accounts Payable $ 26   Accounts Receivable 12 Wages and Other Expenses Payable 111...

  Cash $ 80 Accounts Payable $ 26
  Accounts Receivable 12 Wages and Other Expenses Payable 111
  Inventories 188 Long-Term Debt 203
  Other Current Assets 26 Other Long-Term Liabilities 44
  Property, Plant, and Equipment 355 Contributed Capital 356
  Other Assets 99 Retained Earnings 20


Assume that the following events occurred in the quarter ended December 31 (amounts provided are in whole dollars):

  1. Paid $2,000,000 cash for an additional “other asset”.
  2. Issued additional shares for $2,000,000 in cash.
  3. Purchased property, plant, and equipment; paid $2,000,000 in cash and signed a note to pay the remaining $9,000,000 in two years.
  4. Sold, at cost, other assets for $1,000,000 cash.
  5. Conducted negotiations to purchase a sawmill, which is expected to cost $36,000,000.

transaction. asset =liabilities+shareowner's equity

a

b

c

d

e

2.

Record the transaction effects determined in requirement 1 using journal entries.

3.Summarize the journal entry effects from requirement 2 using T-accounts. Use the September 2017 ending balances as the beginning balances for the October to December 2017 quarter

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

Solutions

Expert Solution

Requirement 1:

Accounting equation
Assets = Liabilities + Stockholder's equity
a ($2,000,000) = +
$2,000,000 = +
b $2,000,000 = + $2,000,000
c ($2,000,000) = $9,000,000 +
$11,000,000 = +
d $1,000,000 = +
($1,000,000) = +
e = +
Total $11,000,000 = $9,000,000 + $2,000,000

Requirement 2:

Account title and Explanation Debit Credit
a Other assets $2,000,000
Cash $2,000,000
[To record purchase of other assets for cash]
b Cash $2,000,000
Contributed capital $2,000,000
[To record issuance of shares for cash]
c Property,plant and equipment $11,000,000
Cash $2,000,000
Notes payable $9,000,000
[To record purchase of property,plant and equipment]
d Cash $1,000,000
Other assets $1,000,000
[To record sale of other assets]
e No entry

Requirement 3:

Cash
Beg. Bal. $80,000,000
b $2,000,000 a $2,000,000
d $1,000,000 c $2,000,000
End. Bal. $79,000,000
Accounts receivable
Beg. Bal. $12,000,000
End. Bal. $12,000,000
Inventories
Beg. Bal. $188,000,000
End. Bal. $188,000,000
Other current assets
Beg. Bal. $26,000,000
End. Bal. $26,000,000
Property,plant, and equipment
Beg. Bal. $355,000,000
c $11,000,000
End. Bal. $366,000,000
Other assets
Beg. Bal. $99,000,000
a $2,000,000 d $1,000,000
End. Bal. $100,000,000
Accounts payable
Beg. Bal. $26,000,000
End. Bal. $26,000,000
Wages and other expenses payable
Beg. Bal. $111,000,000
End. Bal. $111,000,000
Long-term debt
Beg. Bal. $203,000,000
c $9,000,000
End. Bal. $212,000,000
Other long-term liabilities
Beg. Bal. $44,000,000
End. Bal. $44,000,000
Contributed capital
Beg. Bal. $356,000,000
b $2,000,000
End. Bal. $358,000,000
Retained earnings
Beg. Bal. $20,000,000
End. Bal. $20,000,000

Requirement 4:

Balance Sheet
At December 31,2017
Assets Liabilities
Current assets: Current liabilities:
Cash $79,000,000 Accounts payable $26,000,000
Accounts receivable $12,000,000 Wages and other expenses payable $111,000,000
Inventories $188,000,000 Total current liabilities $137,000,000
Other current assets $26,000,000 Long-term debt:
Total current assets $305,000,000 Long-term debt $212,000,000
Property,plant, and equipment $366,000,000 Other long-term liabilities $44,000,000
Other assets $100,000,000 Total long-term debt $256,000,000
Total liabilities $393,000,000
Stockholder's Equity:
Contributed capital $358,000,000
Retained earnings $20,000,000
Total stockholder's equity $378,000,000
Total assets $771,000,000 total liabilities and stockholders' equity $771,000,000

ekkarill92 answered 1 year ago
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