Transactions Aug 4 Larry Lerner, the major shareholder of the company, received $109,000 cash from an inheritance. 5 Lerner deposited $58,000 cash in a new business bank account titled Lerner View Estates Ltd. The business issued common shares to Lerner. 6 The business paid $1,000 cash for letterhead stationery for the new office. 7 The business purchased office furniture. The company paid cash of $12,000 and agreed to pay the account payable for the remainder, $8,000, within three months. 10 Lerner sold FDR shares, which he owned for several years, receiving $76,000 cash from his stockbroker. 11 Lerner deposited the $76,000 cash from the sale of the FDR shares in his personal bank account. 12 A representative of a large company telephoned Lerner and told him of the company's intention to put a down payment of $15,500 on a lot. 18 Lerner finished a real estate deal on behalf of a client and submitted his bill for services, $6,000. Lerner expects to collect from this client within two weeks. 21 The business paid half its account payable for the furniture purchased on August 7. 25 The business paid office rent of $1,300. 31 The business declared and paid a cash dividend of $1,600. Record the August 18th transaction. Lerner finished a real estate deal on behalf of a client and submitted his bill for services, $6,000. Lerner expects to collect from this client within two weeks. Now record the August 21st transaction. The business paid half its account payable for the furniture purchased on August 7. \begin{tabular}{l||l||c||c|} \hline \multicolumn{4}{c}{ Journal Entry } \\ \hline Date & Accounts and Explanations & Debit & Credit \\ \hline Aug & \multicolumn{1}{||||}{} & & \\ \hline \end{tabular} Requirement 4. Record the transactions of the business in its journal. Include an explanation for each entry. (Record debits first, then credits. Enter explanations on the last line of the journal.) Let's start with the August 5th transaction. Lerner deposited $58,000 cash in a new business bank account titled Lerner View Estates Ltd. The business issued common shares to Lerner. Requirement 3. At the end of the first month of operations, Lerner has a number of questions about the financial standing of the business. Explain the following to him: a. How the business can have more cash than retained earnings. The business has $ in cash. The cash balance takes into consideration , including cash received from the issuance of shares. Share issuances go into the Common Shares account, which Retained Earnings. Retained Earnings, on the other hand, holds the amounts of the revenues and the expenses, which received or paid in cash. Therefore, there relationship between cash and retained earnings. b. How much in total resources the business has, how much it owes, and what Lerner's ownership interest is in the assets of the business. The business's total resources are $ The business owes total liabilities of $ Lerner's ownership interest in the assets of the business is $ Next, record the August 7 th transaction. The business purchased office furniture. The company paid cash of $12,000 and agreed to pay the account payable for the remainder, $8,000, within hree months. Record the August 18th transaction. Lerner finished a real estate deal on behalf of a client and submitted his bill for services, $6,000. Lerner expects to collect from this client within two weeks. Journal Entry Next, record the August 25th transaction. The business paid office rent of $1,300. Finally, record the August 31th transaction. The business declared and paid a cash dividend of $1,60 Requirement 1. Classify each of the transactions as either "a" a business-related event but not a transaction to be recorded by the business, "b" a personal transaction for a shareholder not recorded by the business, or "c" a business transaction to be recorded by the business. Ltd. b. A personal transaction for a shareholder, not to be recorded by Lerner View Estates Ltd. c. A business transaction to be recorded by Lerner View Estates Ltd. 2. Analyze the effects of the events on the accounting equation of Lerner View Estates Ltd. 3. At the end of the first month of operations, Lerner has a number of questions about the financial standing of the business. Explain the following to him: a. How the business can have more cash than retained earnings. b. How much in total resources the business has, how much it owes, and what Lerner's ownership interest is in the assets of the business. 4. Record the transactions of the business in its journal. Include an explanation for each entry. equirement 2. Analyze the effects of the events on the accounting equation of Lerner View Estates Ltd. inter the transactions in the accounting equation, beginning with Aug 4. For transactions that affect shareholders' equity, select the type of equity transaction. After all transactions have een entered, calculate the ending balance of each account and the total assets and total liabilities and shareholders' equity. (Use parentheses or a minus sign when decreasing accounts. nly complete the necessary answer boxes, leaving unused cells blank.) Finally, record the August 31th transaction. The business declared and paid a cash dividend of $1,600. \begin{tabular}{|c|c|c|c|} \hline \multicolumn{4}{|c|}{ Journal Entry } \\ \hline Date & Accounts and Explanations & Debit & Credit \\ \hline Aug & & & \\ \hline & & & \\ \hline & & & \\ \hline & & & \\ \hline & & & \\ \hline \end{tabular}