ACCT 201 Principles of Financial Accounting

ACCT 201 Principles of Financial Accounting - Spring 2003
Sections 001 and 002 - Dr. Fred Barbee - Homework Assignment #2 - Chapter 2
Recording Transactions in T-Accounts; Preparing a Trial Balance

NOTE: Although this problem is different from that found in the text, you may use the working papers designed for Problem 2-6B in solving this problem.

At the beginning of April, Brooke Winston launched a custom computer programming company called Softways. The company had the following transactions during April:

a.
Brooke Winston invested $75,000 cash, office equipment with a value of $6,000, and $25,000 of computer equipment in the company in exchange for common stock.

b.
Purchased land worth $27,500 for an office by paying $5,000 cash and signing a long-term note payable for the balance.

c.
Purchased a portable building with $30,000 cash and moved it onto the land acquired in b.

d.
Paid $7,500 cash for the premium on a three-year insurance policy.

e.
Provided services to a client and collected $5,400 cash.

f.
Purchased $5,000 of additional computer equipment by paying $2,500 cash and signing a long-term note payable for the balance due.

g.
Completed $5,250 of services for a client on credit.

h.
Purchased $1,000 of additional office equipment from Yukon Office Supply on credit.

i.
Completed services for Johnson and Company for $10,200 on credit.

j.
Received a bill for $650 for rent of a piece of computer equipment used on a recently completed job. The bill is to be paid within 30 days.

k.
Received $5,100 from Johnson and Company for work completed in transaction i.

l.
Semi-Monthly payroll totaled $2,000 and was paid in cash.

m.
Paid $1,000 to Yukon Office Supply for office equipment purchased in transaction h.

n.
Paid $750 for minor repairs on computer equipment.

o.
Paid $1,800 cash for advertising.

p.
Semi-Monthly payroll totaled $2,000 and was paid in cash.

q.
Paid $5,000 cash for dividends.

Required:

Open the following T-accounts: Cash, Accounts Receivable, Prepaid Insurance, Office Equipment, Computer Equipment, Building, Land, Accounts Payable, Long-Term Notes Payable, Common Stock, Retained Earnings, Fees Earned, Wages Expense, Computer Rental Expense, Advertising Expense, and Repairs Expense.
Record the transactions by entering debits and credits directly in the T-accounts. Use transaction letters to identify each debit and credit. Prepare an unadjusted trial balance as of April 30.
Calculate the company's debt ratio. Use $140,300 as its total assets amount. Are the company's assets financed more by debt or equity?

a.	Brooke Winston invested $75,000 cash, office equipment with a value of $6,000, and $25,000 of computer equipment in the company in exchange for common stock.
b.	Purchased land worth $27,500 for an office by paying $5,000 cash and signing a long-term note payable for the balance.
c.	Purchased a portable building with $30,000 cash and moved it onto the land acquired in b.
d.	Paid $7,500 cash for the premium on a three-year insurance policy.
e.	Provided services to a client and collected $5,400 cash.
f.	Purchased $5,000 of additional computer equipment by paying $2,500 cash and signing a long-term note payable for the balance due.
g.	Completed $5,250 of services for a client on credit.
h.	Purchased $1,000 of additional office equipment from Yukon Office Supply on credit.
i.	Completed services for Johnson and Company for $10,200 on credit.
j.	Received a bill for $650 for rent of a piece of computer equipment used on a recently completed job. The bill is to be paid within 30 days.
k.	Received $5,100 from Johnson and Company for work completed in transaction i.
l.	Semi-Monthly payroll totaled $2,000 and was paid in cash.
m.	Paid $1,000 to Yukon Office Supply for office equipment purchased in transaction h.
n.	Paid $750 for minor repairs on computer equipment.
o.	Paid $1,800 cash for advertising.
p.	Semi-Monthly payroll totaled $2,000 and was paid in cash.
q.	Paid $5,000 cash for dividends.