building at
After playing several seasons of professional football, George Harris had saved enough money
to start a business, to be called Number One Auto Rental. The transactions during March while
the new business was being organized are listed below:
Mar. 1 George Harris invested $140,000 cash in the business by making a deposit in a bank
account in the name of the new company.
Mar. 3 The new company purchased land and building at a cost of $120,000, of which
$72,000 was regarded as applicable to the land and $48,000 to the building. The
transaction involved a cash payment of $41,500 and the issuance of a note payable
for $78,500.
Mar. 5 Purchased 20 new automobiles at $8,600 each from Fleet Sales Company. Paid
$40,000 cash, and agreed to pay $32,000 by March 31 and the remaining balance by
April 15. The liability is viewed as an account payable.
Mar. 7 Sold an automobile at cost to Harris’s father-in-law, Howard Facey, who paid $2,400
in cash and agreed to pay the balance within 30 days.
Mar. 8 One of the automobiles was found to be defective and was returned to Fleet Sales
Company. The amount payable to this creditor was thereby reduced by $8,600.
Mar. 20 Purchased office equipment at a cost of $4,000 cash.
Mar. 31 Issued a check for $32,000 in partial payment of the liability to Fleet Sales Company.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
