Question
Sparty Corporation has been operating for two years. The December 31, 2020, account balances are: Cash $230,000 Accounts Payable $160,000 Accounts Receivable 100,000 Salaries Payable
Sparty Corporation has been operating for two years. The December 31, 2020, account balances are:
Cash | $230,000 |
| Accounts Payable | $160,000 |
Accounts Receivable | 100,000 |
| Salaries Payable | 60,000 |
Inventory | 40,000 |
| Notes Payable | 190,000 |
Supplies | 25,000 |
| Contributed Capital | 210,000 |
Equipment | 180,000 |
| Retained Earnings | 160,000 |
Land | 205,000 |
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|
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During the year 2021, the company had the below activities. Note that none of these activities should impact the income statement, only the balance sheet; we are assuming for simplicity that the company had no revenues or expenses during 2021. Accordingly, we are ignoring any interest associated with the Notes Payable.
- Collected $15,000 cash on open accounts receivable from customers.
- Received a $100,000 loan from the bank, payable in four years.
- Bought additional inventory for $6,000 on account.
- Ordered $10,000 of inventory from a supplier to be delivered next month.
- Received $3,000 of supplies that were ordered last month but will not pay the invoice until the end of the year.
- Paid off $40,000 of notes payable.
- Purchased additional equipment costing $20,000; paying $5,000 in cash and signing a promissory note (i.e., a note payable) to pay the balance in two years.
- Issued additional shares of stock, receiving $50,000 in cash from investors.
- Purchased $40,000 of land with cash.
- Paid off $30,000 of salaries owed from the prior year.
- On a new worksheet, create T-accounts for each account, bringing in the beginning balances from the table you copied and pasted into Excel for #1 above. Be sure you have the balances on the correct side (i.e., debit versus credit) of the account. Note that you should have only one T-account for each account. (For example, you should have one T-account for Cash where all journal entries to the cash account are included).
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