Assume Downer.com was organized on May 1, 2014, to compete with Despair, Inc.-a company that sells demotivational

Question:

Assume Downer.com was organized on May 1, 2014, to compete with Despair, Inc.®-a company that sells demotivational posters and office products. The following events occurred during the first month of Downer.com's operations.
a. Received $60,000 cash from the investors who organized Downer.com Corporation.
b. Borrowed $20,000 cash and signed a note due in two years.
c. Ordered computer equipment costing $16,000.
d. Purchased $9,000 in equipment, paying $2,000 in cash and signing a six-month note for the balance.
e. Received the equipment ordered in (c), paid for half of it, and put the rest on account
Required:
1. Summarize the financial effects of transactions (a) through (e) in a table or spreadsheet similar to Exhibit 2.5.
2. Prepare journal entries for each transaction. Be sure to use referencing and categorize each account as an asset (A), liability (L), or shareholders' equity (SE). If a transaction does not require a journal entry, explain the reason.
3. Prepare a classified at May 31, 2014. Include Retained Earnings with a balance of zero.
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...