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Glenn Grimes is the founder and president of Heartland Construction, a real estate development venture. The business transactions during February while the company was being
Glenn Grimes is the founder and president of Heartland Construction, a real estate development venture. The business transactions during February while the company was being organized are listed as follows.
Feb. | 1 | Grimes and several others invested $700,000 cash in the business in exchange for 30,000 shares of capital stock. | |
Feb. | 10 | The company purchased office facilities for $285,000, of which $95,000 was applicable to the land and $190,000 to the building. A cash payment of $57,000 was made and a note payable was issued for the balance of the purchase price. | |
Feb. | 16 | Computer equipment was purchased from PCWorld for $14,400 cash. | |
Feb. | 18 | Office furnishings were purchased from Hi-Way Furnishings at a cost of $9,950. A $995 cash payment was made at the time of purchase, and an agreement was made to pay the remaining balance in two equal installments due March 1 and April 1. Hi-Way Furnishings did not require that Heartland sign a promissory note. | |
Feb. | 22 | Office supplies were purchased from Office World for $315 cash. | |
Feb. | 23 | Heartland discovered that it paid too much for a computer printer purchased on February 16. The unit should have cost only $350, but Heartland was charged $395. PCWorld promised to refund the difference within seven days. | |
Feb. | 27 | Mailed Hi-Way Furnishings the first installment due on the account payable for office furnishings purchased on February 18. | |
Feb. | 28 | Received $45 from PCWorld in full settlement of the account receivable created on February 23. |
Required:
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 February. The Feb. 1 transaction is provided for you.
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