Question

A company owned several apartment buildings in Greater Carson, a small community. It rented apartments to individuals. CRC began operations in July 2012. During the month of July, the following events occurred:

July 1 The company borrowed $24,000,000 on a 20 year note to finance its activities. There was a one-month grace period before interest was due on the note. Principal payments were due and payable on the first day of each month, beginning on August 1.

July 5 The company purchased an apartment building that was 90% occupied. After all closing costs, legal fees, and other purchase-related transactions had been completed, the building cost $15,000,000.

July 11 $500,000 in materials for renovations and repairs were purchased on credit. Payment was due August 11.

July 14 Tenants in 100 rental units paid their rent, which averaged $600 per unit

July 15 Building staff was paid for the first half of July. Total payroll was $4,000.

July 28 Tenants in 200 rental units paid their rent, which averaged $500 per unit.

July 30 Utilities for the month were paid, totaling $15,000.

July 31 Building staff was paid for the last half of July. Total payroll was $5,000.

1. Prepare a balance sheet for CRC as of July 31, 2012. To do so, draw up a basic balance sheet format, and make entries to the appropriate accounts for each event described above.

Answer 1

Formulas: