Keren Inc Balance Sheet January 312017 ASSETS Current assets

Keren Inc. Balance Sheet January 31,2017 ASSETS Current assets $1,750 2,920 525 3,980 9,175 12,330 10,450 $31,955 Short term investments Notes receivable Total current assets Property, plant and equipment Long term investments Total assets LIABILITIES AND SHAREHOLDERS\' EQUITY Current liabilities Accounts payable 5,870 7,730 13,600 Total current liabilities Long-term debt Total liabilities Shareholders\' equity Common stock ($0.1 par value) Additional paid-in capital Retained earnings 40 11,960 Total shareholders\' equity Total liabilities and shareholders\' equity 31,955 In addition, the following transactions occurred during the year ended January 31, 2018: (a) Borrowed $1,300 from the bank. Debt is due in 10 years. (b) Purchased inventories for $770. $200 were paid in cash, the rest on account. (c) Sold $2,050 long-term investments for $2,050 in cash. (d) Issued 100 shares for $4,000 in cash. (e) Declared and paid a dividend at the amount of S1,650. (f) S525 were paid to the company to eliminate the notes receivable balance. (g) Paid S5,000 of the accounts payable balance. Required: 1. Prepare a journal entry for each of the above seven transactions. Use the account titles from Keren Inc.\'s balance sheet. Create a T-account for each of the balance-sheet accounts. Include the beginning balances for January 31, 2017. Post each journal entry to the appropriate T-account. Prepare Keren Inc.\'s balance sheet for January 31, 2018 based on the T-accounts. 2. 3. iv

Solution

Ans.(1) Keren Inc.\'s Journal Entry Account and Titles Dr.($) Cr.($) a) Cash          1,300    To Long Term Debt          1,300 b) Inventories             770    To Cash             200    To Accounts Payable             570 c) Cash          2,050    To Long-Term Investment          2,050 d) Cash          4,000    To Common Stock          4,000 e) Dividend          1,650    To Cash          1,650 Retained Earning          1,650    To Dividend          1,650 f) Cash             525    To Notes Receivable             525 g) Accounts Payable          5,000    To Cash          5,000 Ans.(2) Accounts Payable Particulars Amt. ($) Particulars Amt. ($) To Cash 5,000 By Balance b/d 5,870 To Balance c/d 1,440 By Inventory 570 6,440 6,440 Long Term Debt Account Particulars Amt. ($) Particulars Amt. ($) To Balance c/d 9,030 By balance b/d 7,730 By Cash 1300 9,030 9,030 Cash Account Particulars Amt. ($) Particulars Amt. ($) To Balance b/d 1,750 By Inventory 200 To Long Term Debt 1,300 By Dividend 1,650 To Long Term Investment 2,050 By Account Payable 5,000 To Common Stock 4000 To Notes Receivable 525 By Balance c/d 2,775 9,625 9,625 Inventory Account Particulars Amt. ($) Particulars Amt. ($) To Balance b/d 3,980 By Balance c/d 4,750 To Cash 200 To Account Payable 570 4,750 4,750 Long-Term Investment Account Particulars Amt. ($) Particulars Amt. ($) To balance b/d 10,450 By Cash 2,050 By Balance c/d 8,400 10,450 10,450 Common Stock Account Particulars Amt. ($) Particulars Amt. ($) To Balance c/d 4,040 By balance b/d 40 By Cash 4000 4,040 4,040 Dividend Account Particulars Amt. ($) Particulars Amt. ($) To Cash 1,650 By Retained Earning 1,650 1,650 1,650 Retained Earnings Account Particulars Amt. ($) Particulars Amt. ($) To Dividend 1,650 Balance b/d 6,355 To Balance c/d 4,705 6,355 6,355 Notes Receivable Account Particulars Amt. ($) Particulars Amt. ($) Balance b/d 525 By Cash 525 525 525 Ans.(3) Keren Inc. Balance Sheet As on January 31, 2018 ASSETS Amt.($) Current Asset:     Cash            2,775     Short term investment            2,920     Inventories            4,750 Total Current Asset          10,445 Property, plant and equipment          12,330 Long term investment            8,400 Total Asset $     31,175 LIABILITIES AND SHAREHOLDERS\' EQUITY Current Liability:     Accounts payable            1,440 Total Current Liability            1,440 Long term debt            9,030 Total liabilities          10,470 Shareholder Equity:     Common Stock            4,040     Additional paid-in capital          11,960     Retained Earnings            4,705 Total shareolders\' equity          20,705 Total liabilities and shareholders\' equity $     31,175