BL Landscapes Inc Mini Practice Part 2 Bill Graham and Lorry

B&L; Landscapes, Inc. Mini Practice Part 2 Bill Graham and Lorry Mitler incorporated 8&1 Landscapes, Inc, on July 1,2016. The business consists of lawn coare and sprinkder system instalations. In addifion, they also sell two types of fertilizer Bil and Larry are concened about ensuring a steady supply of high-quality PVC pipe for the sprinider instollations jobs they do and have come up with a plan to issue bonds to several of their famly members These funds will enable them to acquire a significant portion of the stock of local PVC manufacturer At the end of July. 2017, the company has the following odjusted trial bolance: BEL Landscapes, Inc Irial Bolance July 31, 2017 Cash 47.750 Allowonce for Doubtful Accounts Prepoid insuronce 79.000 35.000 7.600 Land Equipment Accounts Payable 11.500 Preferred Stock Common Stock Relained Earnings Toto 7.000 35,100 17-300 Not included in the adjusted trial balance are the following transactions that occur on July 3 2017 1. 2. B&L; Landscapes, Inc. issued $50,000 worth of 5% 10 year bonds at face value B&L; Landscapes. Inc. purchased 30% of the outstand g common stock of Crestine Pee Inc, for $70.000

Solution

1. In the books of B& L Landscapes Inc. :

2. Cash:

3. B & L Landscapes Inc.

Balance Sheet

July 31, 2017

4. In the books of B & L Landscapes Inc. :

Note: As the investment in Crestline Pipe is 30 % ( greater than 20%), the Equity Method of investment accounting is applied. Accordingly, any distributions by the investee company would bring down the equity investment in the books of the investor company, rather than being recognized as dividend revenue in its income statement.

5. In the books of B & L Landscapes Inc. :

6. In the books of B & L Landscapes Inc. :

Date	Description	Debit	Credit
		$	$
July 31, 2017	Cash	50,000
	Bonds Payable		50,000
July 31, 2017	Equity Investment in Crestline Pipe	70,000
	Cash		70,000