Question
The following is a list of account balances for Pick-A-Pet, Incorporated, as of
June 30, Year 3: Accounts Payable $ 370, 800 Accounts Receivable 85, 000
Cash 741, 600 Common Stock 689, 100 Equipment 62, 000 Logo and
Trademarks 425, 200 Notes Payable 270, 700 Retained Earnings 119, 700
Software 136, 500 The company entered into the following transactions during
July, Year 3. Stockholders contribute $480,000 cash for additional ownership
shares and the company borrows $240,000 in cash from a bank to buy new
equipment at a later date. No other transactions took place during July, Year 3.
Required: a. Prepare a classified balance sheet for the company at June 30, Year
3. b. Show the effects of the July transactions on the basic accounting equation.
c. Prepare the journal entries that would be used to record the transactions.
Answer & Explanation
To address the requirements, let's break down each part:
, a. Classified Balance Sheet as of June 30, Year 3
Assets
Current Assets:
o Cash: $741,600
o Accounts Receivable: $85,000
Non-current Assets:
o Equipment: $62,000
o Software: $136,500
o Logo and Trademarks: $425,200
Total Assets:
= Current Assets + Non-current Assets
= ($741,600 + $85,000) + ($62,000 + $136,500 + $425,200)
= $826,600 + $623,700
= $1,450,300
Liabilities
The following is a list of account balances for Pick-A-Pet, Incorporated, as of
June 30, Year 3: Accounts Payable $ 370, 800 Accounts Receivable 85, 000
Cash 741, 600 Common Stock 689, 100 Equipment 62, 000 Logo and
Trademarks 425, 200 Notes Payable 270, 700 Retained Earnings 119, 700
Software 136, 500 The company entered into the following transactions during
July, Year 3. Stockholders contribute $480,000 cash for additional ownership
shares and the company borrows $240,000 in cash from a bank to buy new
equipment at a later date. No other transactions took place during July, Year 3.
Required: a. Prepare a classified balance sheet for the company at June 30, Year
3. b. Show the effects of the July transactions on the basic accounting equation.
c. Prepare the journal entries that would be used to record the transactions.
Answer & Explanation
To address the requirements, let's break down each part:
, a. Classified Balance Sheet as of June 30, Year 3
Assets
Current Assets:
o Cash: $741,600
o Accounts Receivable: $85,000
Non-current Assets:
o Equipment: $62,000
o Software: $136,500
o Logo and Trademarks: $425,200
Total Assets:
= Current Assets + Non-current Assets
= ($741,600 + $85,000) + ($62,000 + $136,500 + $425,200)
= $826,600 + $623,700
= $1,450,300
Liabilities
