Reference no: EM132713381
Problem - Recording Journal Entries and Preparing a Classified Balance Sheet
Assume Downercom was organized on May 1, to compete with Despair, Inc-a company that sells demotivational posters and of?ce products. The following events occurred during the first month of Downercom's operations.
a. Received $68,000 cash from the investors who organized Downercom Corporation.
b. Borrowed $24,000 cash and signed a note due in two years.
c. Ordered computer equipment costing $18,000.
d. Purchased $11,000 in equipment, paying $2,800 in cash and signing a six-month note for the balance.
e. Received the equipment ordered in (c), paid for half of it, and put the rest on account.
Required -
1. For each of the events (a) through (e), perform transaction analysis and indicate the amount of effect on the accounting equation.
2. Prepare journal entries for each transaction.
3. Prepare a classified balance sheet at May 31. Include retained earnings with a balance of zero.