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Better Corp. completed the following transactions during Year 2:

a. Purchased land for $10,500 cash.
b. Acquired $36,000 cash from the issue of common stock.
c. Received $75,000 cash for providing services to customers.
d. Paid cash operating expenses of $40,900.
e. Borrowed $21,000 cash from the bank.
f. Paid a $10,500 cash dividend to the stockholders.
g. Determined that the market value of the land purchased in event 1 is $46,000.

Required:
a. Record the transactions In the approprlate general ledger accounts. Record the amounts of revenue, expense, and dividends In the Retalned Earnings column. Provide the appropriate titles for these accounts In the last column of the table.
b. As of December 31, 2018, determine the total amount of assets, lablities, and stockholders' equity and present this Information In the form of an accounting equation.
c. What is the amount of total assets, liabilities, and stockholders' equity as of January 1, 2019?

Sagot :

Anthougoidn

Answer:

Better Corp.

a. Journal Entries:

a. Debit Land $10,500

Credit Cash $10,500

To record the purchase of land.

b. Debit Cash $36,000

Credit Common Stock $36,000

To record the issuance of stock for cash.

c. Debit Cash $75,000

Credit Service Revenue $75,000

To record the receipt of cash for services provided.

d. Debit Operating expenses $40,900

Credit Cash $40,900

To record the payment of operating expenses.

e. Debit Cash $21,000

Credit Bank Loan $21,000

To record the borrowing of cash from the bank.

f. Debit Dividends $10,500

Credit Cash $10,500

To record the payment of cash dividend to stockholders.

g. N/A

a2. a. Assets (Land +$10,500 + Cash- $10,500) = Liabilities + Equity

b. Assets (Cash + $36,000) = Liabilities + Equity (Common Stock + $36,000)

c. Assets (Cash $36,000 + 75,000) = Liabilities + Equity (Common Stock $36,000 + Retained Earnings + $75,000) Service Revenue

d. Assets (Cash 111,000 - $40,900) = Liabilities + Equity (Common Stock $36,000 + Retained Earnings $75,000 = $40,900) Operating Expense

e. Assets (Cash $70,100 + $21,000) = Liabilities (Bank Loan + $21,000) + Equity (Common Stock $36,000 + Retained Earnings $34,100)

f. Assets (Cash $91,100 - $10,500) = Liabilities (Bank Loan + $21,000) + Equity (Common Stock $36,000 + Retained Earnings $34,100 - $10,500) Dividends

g. Assets (Cash $80,600) = Liabilities (Bank Loan + $21,000) + Equity (Common Stock $36,000 + Retained Earnings $23,600)

b. Total amount of assets, liabilities, and stockholders' equity as of December 31, 2018:

Total assets $80,600  = Liabilities $21,000 + Equity (Common Stock $36,000 + Retained Earnings $23,600)

c. The amount of total assets, liabilities, and stockholders' equity as of January 1, 2019:

Assets = $80,600

Liabilities = $21,000

Equity = $59,600

Explanation:

The accounting equation is Assets = Liabilities + Equity.  It is the basis of the double-entry system of accounting.  With this equation, every transaction is always recorded twice.

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