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02 - SOLUTION Problem 2-1 Solid Footing

02 - SOLUTION Problem 2-1 Solid Footing - Balance...

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General Journal Date Account Debit Credit Jan 01 Cash - Big Bank 40,000 Cash - Little Bank 10,000 Common Stock 50,000 Issue Common Stock Jan 02 Equipment 35,000 Cash - Big Bank 35,000 Purchase equipment for cash Jan 05 Cash - Big Bank 75,000 Note Payable - Big Bank 75,000 Borrow from Big Bank on a note Jan 10 Cash - Little Bank 35,000 Note Payable - Little Bank 35,000 Borrow from Little Bank on a note Jan 20 Inventory 55,000 Cash - Big Bank 40,000 Cash - Little Bank 15,000 Purchase inventory for cash Jan 25 Equipment 10,000 Cash - Little Bank 10,000 Purchase equipment for cash Problem 2-1 Solution -- OverPriced Jeans, Inc. Starts Business
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General Ledger Assets = Liabilities + Owners' Equity Cash - Big Bank N/P - Big Bank Common Stock Dr. Cr. Dr. Cr. Dr. Cr. Beg. Balance 0 Beg. Balance 0 Beg. Balance 0 Jan 01 40,000 Jan 05 75,000 Jan 01 50,000 Jan 02 35,000 Ending Balance 75,000 Ending Balance 50,000 Jan 05 75,000 Jan 20 40,000 Ending Balance 40,000 N/P - Little Bank Dr. Cr. Beg. Balance 0 Cash - Little Bank Jan 10 35,000 Dr. Cr. Ending Balance 35,000 Beg.
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Unformatted text preview: Balance 0 Jan 01 10,000 Jan 10 35,000 Jan 20 15,000 Jan 25 10,000 Ending Balance 20,000 Inventory Dr. Cr. Beg. Balance 0 Jan 20 55,000 Ending Balance 55,000 Equipment Dr. Cr. Beg. Balance 0 Jan 02 35,000 Jan 25 10,000 Ending Balance 45,000 Problem 2-1 Solution (continued) Trial Balance Account Name Debit Credit Cash - Big Bank 40,000 Cash - Little Bank 20,000 Inventory 55,000 Equipment 45,000 Note Payable - Big Bank 75,000 Note Payable - Little Bank 35,000 Common Stock 50,000 Total 160,000 160,000 Problem 2-1 Solution (continued) OverPriced Jeans, Inc. Balance Sheet as of January 31, 2011 Assets: Cash - Big Bank $40,000 Cash - Little Bank 20,000 Inventory 55,000 Equipment 45,000 Total Assets $160,000 Liabilities: Note Payable - Big Bank $75,000 Note Payable - Little Bank 35,000 Total Liabilities 110,000 Equity: Common Stock 50,000 Total Equity 50,000 Total Liabilities & Equity $160,000 Problem 2-1 Solution (continued)...
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