Precision Builders Construction Company was incorporated by Chris Stoschek. The following activities occurred during the year:
a. Received from three investors $60,000 cash and land valued at $35,000; each investor was issued 1,000 shares of common stock with a par value of $0.10 per share.
b. Purchased construction equipment for use in the business at a cost of $36,000; one-fourth was paid in cash and the company signed a note for the balance (due in six months).
c. Lent $2,500 to one of the investors, who signed a note due in six months.
d. Chris Stoschek purchased a truck for personal use; paid $5,000 down and signed a one-year note for $22,000.
e. Paid $12,000 on the note for the construction equipment in (b) (ignore interest).
Required:
1. Create T-accounts for the following accounts: Cash, Notes Receivable, Equipment, Land, Notes Payable, Common Stock, and Additional Paid-in Capital. Beginning balances are $0. For each of the transactions (a) through (e), record the effects of the transaction in the appropriate T-accounts. Include good referencing and totals for each T-account.
2. Using the balances in the T-accounts, fill in the following amounts for the accounting equation:
Assets $ __________ = Liabilities $ ___________ + Stockholders' Equity $
3. Explain your response to event (d).
4. Compute the market value per share of the stock issued in (a).