Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby

Exercise 41

Recording Transactions (in a Journal and T-Accounts); Preparing a Trial Balance;
Preparing and Interpreting the Balance Sheet
Deliberate Speed Corporation (DSC) was incorporated as a private company on June 1, 2013. The company's accounts included the following at June 30, 2013:

During the month of July, the company had the following activities:
a. Issued 4,000 shares of common stock for $400,000 cash.
b. Borrowed $100,000 cash from a local bank, payable June 30, 2015.
c. Bought a building for $182,000; paid $82,000 in cash and signed a three-year note for the balance.
d. Paid cash for equipment that cost $200,000.
e. Purchased supplies for $30,000 on account.
Required:
1. Analyze transactions ( a )-( e ) to determine their effects on the accounting equation.
2. Record the transaction effects determined in requirement 1 using a journal entry format.
3. Summarize the journal entry effects from requirement 2 using T-accounts.
4. Prepare a classified balance sheet at July 31, 2013.
5. As of July 31, 2013, has the financing for DSC's investment in assets primarily come from liabilities or stockholders' equity