E2–11
Req. 1
Assets
Liabilities
Stockholders’ Equity
Cash
Equipment
Accounts
Payable
ST Notes
Payable
Common Stock
Beg.
0
0
0
0
0
a.
+60,000
+60,000
b.
+20,000
c.
No transaction, therefore no financial effects to record.
d.
-2,000
+9,000
+7,000
e.
-8,000
+16,000
+8,000
End.
70,000
25,000
8,000
7,000
60,000
Req 2:
a.
Cash (+A) ………………………………………………………………….
60,000
Common Stock (+SE) …………………………………………….
60,000
Cash (+A) ………………………………………………………………….
Equipment (+A) …………………………………………………………
Note Payable (short-term) (+L)…………………………………
Equipment (+A) ………………………………………………………….
Accounts Payable (+L) ……………………………………………
Fundamentals of Financial Accounting, 5/e 2-22
E2-11 (continued)
Req. 3:
DOWN.COM
Balance Sheet
At May 31
Assets
Liabilities
Current Assets
Current Liabilities
Cash
$ 70,000
Accounts Payable
Note Payable (short-term)
$ 8,000
7,000
Total Current Assets
70,000
Total Current Liabilities
15,000
Noncurrent Assets
Note Payable (long-term)
20,000
Equipment
25,000
Total Liabilities
35,000
Total Assets
$ 95,000
Stockholders’ Equity
Common Stock
Retained Earnings
60,000
0
Total Stockholders’ Equity
60,000
Total Liabilities & Stockholders’
Equity
$ 95,000
Fundamentals of Financial Accounting, 5/e 2-23
© 2016 by McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
E2–12
Req. 1
Assets
=
Liabilities
+
Stockholders’
Equity
Cash
Equipment
Land
Accounts
Payable
Notes
Payable
Common Stock
(a)
+40,000
=
+40,000
(b)
+12,000
=
+12,000
(c)
-2,000
+20,000
=
+18,000
(d)
-2,000
+2,000
=
(e)
No change*
No change
+36,000
+22,000
+12,000
=
+30,000
+40,000
*Event (e) is not considered a transaction of the company because the separate entity
assumption (from Chapter 1) states that transactions of the owners are separate from
transactions of the business.
Req. 2
a.
Cash (+A) ………………………………………………………………….
40,000
Common Stock (+SE) …………………………………………….
40,000
b.
Land (+A) …………………………………………………………………..
12,000
Note Payable (long-term) (+L) ………………………………….
12,000
c.
Equipment (+A) …………………………………………………………
20,000
Cash (-A) ………………………………………………………………
2,000
Note Payable (long-term) (+L) ………………………………….
18,000
d.
Equipment (+A) …………………………………………………………
2,000
Cash (-A) ………………………………………………………………
2,000
e.
This is not a transaction of the business, so a journal entry is not needed.
E2-12 (continued)
Req. 3
Cash (A)
Equipment (A)
Beg.
0
Beg.
0
(a)
40,000
2,000
(c)
(c)
20,000
2,000
(d)
(d)
2,000
End.
36,000
End.
22,000
Land (A)
Beg.
0
(b)
12,000
End.
12,000
0
Beg.
Beg.
12,000
(b)
(a)
18,000
(c)
30,000
End.
End.
Assets
Liabilities
Current Assets
Notes Payable (long-term)
Equipment
Fundamentals of Financial Accounting, 5/e 2-25
© 2016 by McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
E2–13
Transaction
Brief Explanation
(a)
Issued common stock for $17,000 cash.
(b)
Purchased a building for $50,000; paid $10,000 cash and gave a
$40,000 note payable for the balance.
(c)
Used cash to purchase supplies costing $1,500.
E2–14
Req. 1
September 30, 2013 December 31, 2012
Current Ratio = $1,180,200 = 4.36 Current Ratio = $1,122,600 = 4.45
$ 270,700 $ 252,100
Req. 2
E2–15
Req. 1
Assets
=
Liabilities
+
Stockholders’ Equity
1.
Cash
+12,000
=
Common
Stock
+12,000
2.
Cash
+30,000
=
Note Payable
(long–term)
+30,000
3.
Equipment
Cash
+40,000
– 35,000
=
Note Payable
(short-term)
+5,000
4.
Supplies
+900
=
Accounts Payable
+900
Req. 2
1.
Cash (+A) ………………………………………………………………….
12,000
Common Stock (+SE) …………………………………………….
12,000
2.
Cash (+A) ………………………………………………………………….
30,000
Note Payable (long-term) (+L) ………………………………….
30,000
Equipment (+A) …………………………………………………………
Note Payable (short-term) (+L)…………………………………
Supplies (+A) ……………………………………………………………..
E2–15 (continued)
Req. 2 (continued)
Cash (A)
Supplies (A)
Beg.
0
Beg.
0
(1)
12,000
35,000
(3)
(4)
900
(2)
30,000
End.
7,000
End.
900
Accounts Payable (L)
Notes Payable
(short-term) (L)
0
Beg.
0
Beg.
900
(4)
5,000
(3)
900
End.
5,000
End.
Equipment (A)
Beg.
0
(3)
40,000
End.
40,000
Common Stock (SE)
0
Beg.
12,000
(1)
12,000
End.
Notes Payable
(long-term) (L)
0
Beg.
30,000
(2)
30,000
End.
Fundamentals of Financial Accounting, 5/e 2-28
E2–15 (continued)
Req. 3 BUSINESS SIM CORP.
Balance Sheet
At September 30
Assets
Liabilities
Current Assets
Current Liabilities
Cash
$ 7,000
Accounts Payable
$ 900
Supplies
900
Note Payable
5,000
Total Current Assets
7,900
Total Current Liabilities
5,900
Note Payable
30,000
Total Liabilities
35,900
Stockholders’ Equity
Equipment
40,000
Common Stock
12,000
Retained Earnings
0
Total Stockholders’ Equity
12,000
Total Assets
$ 47,900
Total Liabilities &
Stockholders’ Equity
$ 47,900
Req. 4
At September 30, BSC reported $7,900 of current assets and $5,900 of current
Fundamentals of Financial Accounting, 5/e 2-29
ANSWERS TO COACHED PROBLEMS
CP2-1
Req. 1
Ag BioTech was organized as a corporation. Only a corporation issues shares of stock
to its owners in exchange for their investment, as ABT did in transaction (a).
Req. 2
Assets
=
Liabilities
+
Stockholders’ Equity
Cash
Supplies
Land
Building
Equipment
Note
Payable
Common
Stock
Retained
Earnings
(a)
+40,000
=
+40,000
(b)
–13,000
+18,000
+65,000
+16,000
=
+86,000
(c)
No effect
(d)
–3,000
+3,000
=
No change
(e)
+6,000
–6,000
=
No change
+30,000
+3,000
+12,000
+65,000
+16,000
=
+86,000
+40,000
Req. 3
The transaction between the two stockholders (event c) was not included in the
spreadsheet. Because event (c) occurs between the owners and others, the separate
entity assumption implies this transaction does not affect the business.
Fundamentals of Financial Accounting, 5/e 2-30
CP2-1 (Continued)
Req. 4
(a) Total assets = $30,000 + $3,000 + $12,000 + $65,000 + $16,000
= $126,000
CP2-2
Req. 1
Assets
=
Liabilities
+
Stockholders’ Equity
Cash
Supplies
Building
Equip
Land
Accounts
Payable
Notes
Payable
Common
Stock
Retained
Earnings
16,000
5,000
200,000
18,000
90,000
=
4,000
17,000
308,000
0
a.
+200,000
=
+200,000
b.
+30,000
=
+30,000
c.
–41,000
+141,000
=
+100,000
d.
–100,000
+100,000
=
e.
+10,000
+10,000
105,000
15,000
341,000
118,000
90,000
=
14,000
147,000
508,000
0