E2-15 Analyzing and Recording Transactions, and Preparing and Evaluating a Balance Sheet [LO 2-2, LO 2-3, LO 2-4, LO 2-5]

Business Sim Corp. (BSC) issued 1,000 common shares to Kelly in exchange for $15,000. BSC borrowed $36,000 from the bank, promising to repay it in two years. BSC purchased computer equipment for $47,000, signing a six-month note for $6,000, and paying the balance with check number 101. BSC received $750 of supplies purchased on account. BSCs loan contains a clause (covenant) that requires BSC to maintain a ratio of current assets to current liabilities of at least 1.5.

Reg 2A Reg 2B Prepare T-accounts. Assume all beginning balances are zero. Cash 0 Supplies 0 Beg. Bal. Beg. Bal 750 End. Bal. End. Bal. 750 Equipment Accounts Payable Beg. Bal. 0 Beg. Bal. 0 750 41,000 6,000 47,000 End. Bal End. Bal. 750 Notes Payable (long-term) Beg. Bal. Beg. Bal. 1. Notes Payable (short-term) 0 X 6.000 X 47.000 End. Bal. 47,000 End. Bal. 6.000 Common Stock Beg. Bal. 0 15,000 End. Bal. 15,000