CP2-2 Recording Transactions (in a Journal and T-Accounts); Preparing and Interpreting the Balance Sheet [LO 2-2, LO 2-3, LO 2-4, LO 2-5]

[The following information applies to the questions displayed below.]

Athletic Performance Company (APC) was incorporated as a private company. The companys accounts included the following at July 1:

Accounts Payable	$	6,700
Building		268,000
Cash		10,150
Common Stock		404,000
Equipment		34,750
Land		112,000
Notes Payable (long-term)		22,750
Retained Earnings		0
Supplies		8,550

During the month of July, the company had the following activities:

During the month of July, the company had the following activities:

a.	Issued 3,400 shares of common stock for $340,000 cash.
b.	Borrowed $34,250 cash from a local bank, payable in two years.
c.	Bought a building for $211,000; paid $55,000 in cash and signed a three-year note for the balance.
d.	Paid cash for equipment that cost $127,000.
e.	Purchased supplies for $18,500 on account.

Required:

1.

Analyze transactions (a)(e) to determine their effects on the accounting equation. (Enter any decreases to account balances with a minus sign.)

	Assets					=	Liabilities		+	Stockholders' Equity
	Cash	Supplies	Building	Equipment	Land		Accounts Payable	Notes Payable		Common Stock	Retained Earnings
Beg.	10,150	8,550	268,000	34,750	112,000		6,700	22,750		404,000
a.
b.
c.
d.
e.
End.

2.

Record the transaction effects determined in part 1 using journal entries. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

1.) Issuance of 3,400 shares of common stock for $340,000 cash. Record the transaction.

2.) The borrowing of $34,250 cash from a local bank, payable June in two years. Record the transaction.

3.) The purchase of a building for $211,000; paid $55,000 in cash and signed a three-year note for the balance. Record the transaction.

4.) The payment of cash for equipment that cost $127,000. Record the transaction.

5.) The purchase of supplies for $18,500 on account. Record the transaction.

Transaction

General Journal

Debit

Credit

a.

CP2-2 Part 3

3.

Summarize the journal entry effects from part 2 using T-accounts. (TIP: Enter the July 1 balances as the months beginning balances.)

Cash					Supplies
Beg. Bal.					Beg. Bal.
End. Bal.					End. Bal.
Equipment					Building
Beg. Bal.					Beg. Bal.
End. Bal.					End. Bal.
Land					Accounts Payable
Beg. Bal.					Beg. Bal.
End. Bal.					End. Bal.
Notes Payable (long-term)					Common Stock
Beg. Bal.					Beg. Bal.
End. Bal.					End. Bal.
Retained Earnings
Beg. Bal.
End. Bal.

4.	Prepare a trial balance at July 31.

ATHLETIC PERFORMANCE COMPANY
Trial Balance
	Debit	Credit
Totals	$0	$0