Recording Business transactions

On February 1st, Brenda creates a new company providing accounting services investing $20,000 cash in exchange of 1,000 shares of capital stock. The company will be called Creative accounting Ltd.

The same day the company purchases a small office for $50,000. Pays $5,000 in cash and issues a note payable for the remainder. The price of the building is $40,000 and the land $10,000.

On February 2nd the company hires an employee for $1,000/month. Salaries are payable the day 5 of the following month.

On February 3rd the company purchases furniture for $6,000. Pays $1,500 cash and will pay the remainder in March 15. The same day the company purchases 2 computers for $2,400

On February 15 the company bills client Mr. Happy for $1,600. The client pays $600 cash and will pay the remainder within one week. On February 19 the company receives an electricity bill to be paid in March.

On February 21 the company receives the settlement of Mr. Happys account receivable.

On February 28, the company Sends an invoice to its client Mr. Brown for services rendered during the month of February for $3,000. The invoice should be paid before March 15.

1: Prepare the journal entries for the above mentioned transactions. (30 points)

2: Prepare a ledger account for all the accounts listed below. (20 points)

List of accounts: Accounts payable, accounts receivable, cash, note payable, land, computers, building, salaries payable, revenue, salaries expense, electricity expense,.

3: calculate the balance of each one of the 3 sections of the balance sheet at the end of February (assets, liabilities, owners equity). Show your calculation) (10 points)