Chris North is the founder and president of North Enterprises, a real estate development venture.

The business transactions during April while the company was being organized are listed below.

Apr. 1 North and several others invested $650,000 cash in the business in exchange for 10,000 shares of capital stock.

Apr. 6 The company purchased office facilities for $300,000, of which $60,000 was applicable to the land and $240,000 to the building. A cash payment of $100,000 was made and a note payable was issued for the balance of the purchase price.

Apr. 10 Computer equipment was purchased from Comp Central for $6,000 cash.

Apr. 12 Office furnishings were purchased from Sam’s Furniture at a cost of $12,000.

A $1,000 cash payment was made at the time of purchase, and an agreement was made to pay the remaining balance in two equal installments due May 1 and June 1.

Sam’s Furniture did not require that North sign a promissory note.

Apr. 20 Office supplies were purchased from Office Space for $750 cash.

Apr. 25 North discovered that it paid too much for a computer printer purchased on April 10.

The unit should have cost only $600, but North was charged $800. Comp Central promised to refund the difference within seven days.

Apr. 28 Mailed Sam’s Furniture the first installment due on the account payable for office furnishings purchased on April 12.

Apr. 29 Received $200 from Comp Central in settlement of the account receivable created on April 25.

Instructions

a. Prepare journal entries to record the above transactions. Select the appropriate account titles from the following chart of accounts:

Cash........................Land

Accounts Receivable................Office Building

Office Supplies..................Notes Payable

Office Furnishings...................Accounts Payable

Computer Systems.................Capital Stock

b. Indicate the effects of each transaction on the company’s assets, liabilities, and owners’ equity for the month of April. Organize your analysis in tabular form as shown below for the April 1transaction:

Transcribed Image Text:

Transaction Assets - Liabilities Owners' Equity Apr. 1 +$650,000 (Cash - $0 +$650,000 (Capital Stock)