Transaction Analysis and Financial Statements
Blue Jay Delivery Service is incorporated on January 2 and enters into the following transactions during its first month of operations:
January 2: | Filed articles of incorporation with the state and issued 100,000 shares of capital stock. Cash of $100,000 is received from the new owners for the shares. |
January 3: | Purchased a warehouse and land for $80,000 in cash. An appraiser values the land at $20,000 and the warehouse at $60,000. |
January 4: | Signed a three-year promissory note at Third State Bank in the amount of $50,000. |
January 6: | Purchased five new delivery trucks for a total of $45,000 in cash. |
January 31: | Performed services on account that amounted to $15,900 during the month. Cash amounting to $7,490 was received from customers on account during the month. |
January 31: | Established an open account at a local service station at the beginning of the month. Purchases of gas and oil during January amounted to $3,230. Blue Jay has until the 10th of the following month to pay its bill. |
Required:
1. Complete the below table to summarize the preceding transactions as they affect the accounting equation. Ignore depreciation expense and interest expense. If an account is unaffected by a transaction, enter "0". Use the minus sign to indicate decreases.
Blue Jay Delivery Service Transactions for the Month of January |
|||||||||||||||||||||||||
Assets | = | Liabilities | + | Stockholders' Equity | |||||||||||||||||||||
Date | Cash | Accounts Receivable | Trucks | Warehouse | Land | Accounts Payable | Notes Payable | Capital Stock | Retained Earnings | ||||||||||||||||
January 2 | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
January 3 | |||||||||||||||||||||||||
Balance | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
January 4 | |||||||||||||||||||||||||
Balance | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
January 6 | |||||||||||||||||||||||||
Balance | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
January 31-Revenue | |||||||||||||||||||||||||
Balance | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
January 31-Payment received | |||||||||||||||||||||||||
Balance | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
January 31-Gas & oil | |||||||||||||||||||||||||
Balance | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
Total Assets: | $ | Total Liabilities and Stockholders' Equity: | $ |
2. Prepare an income statement for the month of January.
Blue Jay Delivery Service | |
Income Statement | |
For the Month Ended January 31 | |
$ | |
$ |
3. Prepare a classified balance sheet at January 31.
Blue Jay Delivery Service | ||
Balance Sheet | ||
January 31 | ||
Assets | ||
Current assets: | ||
$ | ||
Total current assets | $ | |
Property, plant, and equipment: | ||
$ | ||
Total property, plant, and equipment | ||
Total assets | $ | |
Liabilities and Stockholders' Equity | ||
Current liabilities: | ||
$ | ||
Long-term debt: | ||
Total liabilities | $ | |
$ | ||
Total stockholders' equity | ||
Total liabilities and stockholders' equity | $ |
4. Assume that you are considering buying stock in a company. The business signed a three year promissory note at Third State Bank in the amount of $50,000. What additional information you would like to have about this transaction?
Question 1 Solution :
Transactions For the month of January for Blue Jay Delivery Service
Amount in ( $ )
Date | Cash Account Recivable | Truck Warehouse | Land Account Payable | Note Payable | Capital Stock | Retained Earning |
Jan 2 | 100,000 | 0 | 0 | 0 | 100,000 | 0 |
Jan 3 | 0 | 0 | 80,000 | 0 | 0 | 0 |
Jan 4 | 0 | 0 | 0 | 50,000 | 0 | 0 |
Jan 6 | 0 | 45,000 | 0 | 0 | 0 | 0 |
Jan 31 | 15,900 | 0 | 0 | 0 | 0 | 0 |
Jan 31 | 7,490 | 0 | 0 | 0 | 0 | 0 |
Total | 123,390 | 45,000 | 80,000 | 50,000 | 100,000 | 0 |
Total Assets = Liabilities + Stockholder's Equity
= (45000 + 80000+ 50000) + 100000
= 175000 + 100000
Total Assets = $ 275000
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