Jonah Lee established Lee Delivery Company in 2010. The following transactions occurred during the year:

(a) Received $90,000 cash from Jonah Lee, the sole owner.

(b) Purchased land for $12,000, signing a two-year note (ignore interest).

(c) Bought two used delivery trucks at the start of the year at a cost of $10,000 each; paid $2,000 cash and signed a note due in three years for the rest (ignore interest).

(d) Sold one-fourth of the land for $3,000 to Birkins Moving, which signed a note agreeing to pay Lee Delivery Company in six months (ignore interest).

(e) Paid $52,000 cash to construct a garage for the trucks.

(f) Jonah Lee paid $122,000 cash for land for his personal use.

Required:

1. Analyze each item for its effects on the financial statements of Lee Delivery Company for the year ended December 31, 2010. Transaction (a) is presented as an example:

2. Record the effects of each item into a journal entry, using the simplified journal entry format shown in the chapter.
3. Summarize the effects of the journal entries by account, using the T-account format shown in the chapter.
4. Prepare a classified balance sheet for Lee Delivery Company on December 31, 2010.

Transcribed Image Text:

Liabilities Assets Cash +90,000 Owner's Equity J. Lee,Capital +90,000