Assume Downcom was organized on May 1 to compete with Despai

Assume Down.com was organized on May 1, to compete with Despair.com-a company that sells de-motivational posters and office products. The following events occurred during the first month of Down.com\'s operations. Received $44,000 cash from the investors who organized Down.com Corporation. b. Borrowed $17,000 cash and signed a note due in two years. c. Ordered equipment costing $12,000. dPurchased $8,000 in equipment, paying $3,000 in cash and signing a six-month note for the balance Received the equipment ordered in (d), paid for half of it, and put the rest on account. 6.66 points Required 1. Summarize the financial effects of items (a)-(e) in a table (Enter any decreases to account balances with a minus sign.) Assets Accounts ST Notes LTNotes CashEquipment Beg 44,000 44,000 17,000 17 d. (3,000 (6,000 52,000 8,000 12,000 20,000 ,000 8,000 End. 17,000 60,000

Solution

Answers

ASSETS

=

LIABILITIES

+

STOCKHOLDER\'S EQUITY

Cash

Equipment

=

Accounts Payable

ST Notes Payable

LT Notes Payable

+

Common Stock

Beg

=

+

a

$            44,000.00

=

+

$          44,000.00

b

$            17,000.00

=

$          17,000.00

+

c

=

+

d

$            (3,000.00)

$                                           8,000.00

=

$                   5,000.00

+

e

$            (6,000.00)

$                                         12,000.00

=

$              6,000.00

+

End

$            52,000.00

$                                         20,000.00

=

$              6,000.00

$                   5,000.00

$          17,000.00

+

$          44,000.00

Transaction

General Journal

Debit

Credit

a

Cash

$                                         44,000.00

Common Stock

$                     44,000.00

b

Cash

$                                         17,000.00

Notes payable Long Term

$                     17,000.00

c

No Entry

d

Equipment

$                                           8,000.00

Cash

$                       3,000.00

Notes payable Short Term

$                       5,000.00

e

Equipment

$                                         12,000.00

Cash

$                       6,000.00

Accounts Payable

$                       6,000.00

Assets

Liabilities

Current Assets:

Current Liabilities:

Cash

$          52,000.00

Accounts Payable

$             6,000.00

Total Current Assets

$          52,000.00

Notes payable Short Term

$             5,000.00

Total Current Liabilities

$          11,000.00

Property, Plant & Equipment:

Equipment

$          20,000.00

Long Term Liabilities:

Notes payable Long Term

$          17,000.00

Total Liabilities

$          28,000.00

Stockholder\'s Equity

Common Stock

$          44,000.00

Retained earnings

$                          -  

Total Stockholder\'s Equity

$         44,000.00

Total Assets

$          72,000.00

Total Liabilities & Stockholder\'s Equity

$          72,000.00

	ASSETS	=	LIABILITIES	+	STOCKHOLDER\'S EQUITY
	Cash	Equipment	=	Accounts Payable	ST Notes Payable	LT Notes Payable	+	Common Stock
Beg			=				+
a	$            44,000.00		=				+	$          44,000.00
b	$            17,000.00		=			$          17,000.00	+
c			=				+
d	$            (3,000.00)	$                                           8,000.00	=		$                   5,000.00		+
e	$            (6,000.00)	$                                         12,000.00	=	$              6,000.00			+
End	$            52,000.00	$                                         20,000.00	=	$              6,000.00	$                   5,000.00	$          17,000.00	+	$          44,000.00