Adam and David are two entrepreneurs who agreed to form a corporation ("A&D") tooperate a car repair shop in the Boston region. They began business on January 1, 2021with the following transactions occurred during the month of January. Prepare journalentries, T-accounts, and a balance sheet as of January 31, 2021 for A&D. Organize yourT-accounts by following the order of assets, liabilities, equity, revenues, and expenses.Each T-account should start with a beginning balance and end with an ending balance foreach reporting period. (Note: for T-accounts, you may use a table like the one below. Create atable using the "Insert" or "Table" function in the ribbon. Cells can be merged from the "Table"function in the ribbon. You can access more format functions when you click the three dots onthe right side above the text entry box.)Name of account 1Name of account 2Name of account 31. (a) Adam contributed $100,000 to A&D in exchange for 1,000 shares of A&Dcommon stock. (b) David transferred to A&D title to a shop space, valued at$100,000, in exchange for 1,000 shares of A&D common stock.2. A&D bought tools and supplies for $9,000 from X Corp., charging the purchase to itsaccount.3. A&D ordered $2,000 in a used equipment from a supplier (Y Corp.). The terms of theorder permitted A&D to cancel the order without any obligation whatsoever up untilthe time of delivery.4. A&D borrowed $8,000 from a local bank, a one-year loan with 10% annual interestrate. The loan agreement specifies that interest and principle will be paid on theloan's maturity date. 5. Y Corp. delivered the equipment A&D ordered. A&D paid Y Corp. for the equipmentwhen it was delivered.6. A&D paid X Corp. $3,000 on its account.7. A&D realized that it ordered one repair tool too many from X Corp.. It sold the extratool to a local garage (Z LLC) for $800, which is what A&D paid for it. Z LLC gaveA&D a note, payable by Z LLC to A&D in 30 days.

Solution: Journal Entries Date Accounts Debit Credit 1a Cash 100,000 Common Stock…

Answered: Adam and David are two entrepreneurs…

Adam and David are two entrepreneurs who agreed to form a corporation ("A&D") to operate a car repair shop in the Boston region. They began business on January 1, 2021

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Adam and David are two entrepreneurs who agreed to form a corporation ("A&D") to
operate a car repair shop in the Boston region. They began business on January 1, 2021
with the following transactions occurred during the month of January. Prepare journal
entries, T-accounts, and a balance sheet as of January 31, 2021 for A&D. Organize your
T-accounts by following the order of assets, liabilities, equity, revenues, and expenses.
Each T-account should start with a beginning balance and end with an ending balance for
each reporting period. (Note: for T-accounts, you may use a table like the one below. Create a
table using the "Insert" or "Table" function in the ribbon. Cells can be merged from the "Table"
function in the ribbon. You can access more format functions when you click the three dots on
the right side above the text entry box.)
Name of account 1
Name of account 2
Name of account 3
1. (a) Adam contributed $100,000 to A&D in exchange for 1,000 shares of A&D
common stock. (b) David transferred to A&D title to a shop space, valued at
$100,000, in exchange for 1,000 shares of A&D common stock.
2. A&D bought tools and supplies for $9,000 from X Corp., charging the purchase to its
account.
3. A&D ordered $2,000 in a used equipment from a supplier (Y Corp.). The terms of the
order permitted A&D to cancel the order without any obligation whatsoever up until
the time of delivery.
4. A&D borrowed $8,000 from a local bank, a one-year loan with 10% annual interest
rate. The loan agreement specifies that interest and principle will be paid on the
loan's maturity date.

5. Y Corp. delivered the equipment A&D ordered. A&D paid Y Corp. for the equipment
when it was delivered.
6. A&D paid X Corp. $3,000 on its account.
7. A&D realized that it ordered one repair tool too many from X Corp.. It sold the extra
tool to a local garage (Z LLC) for $800, which is what A&D paid for it. Z LLC gave
A&D a note, payable by Z LLC to A&D in 30 days.

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