Question

Laser Delivery Services, Inc. (LDS), was incorporated January 1. The following transactions occurred during the year: a. Received $34,000 cash from the company's founders in exchange for common stock. b. Purchased land for $12,500, signing a two-year note (ignore interest). c. Bought two used delivery trucks at the start of the year at a cost of $10,000 each; paid $2,000 cash and signed a note due in three years for $18,000 (ignore interest). d. Paid $1,500 cash to a truchyrepair shop for a new motor, which increased the cost of one of the trucks. e. Stockholder Jonah Lee paid $290,000 cash for a house for his personal use. 4. Prepare a classified balance sheet for LDS at December 31. Include Retained Earnings on the balance sheet even thought account has a zero balance. LASER DELIVERY SERVICES, INC. Balance Sheet At December 31 1

Answer 1

Solution:

Classified Balance Sheet of Laser Delivery Services:

LASER DELIVERY SERVICES, INC.
Balance Sheet
At December 31
Assets			Liabilities
Current assets:			Current LiabiIities	$                 -
Cash		$         30,500	Long Term Liabilities
Total Current Assets		$         30,500	Notes Payable	$        30,500
			Total Liabilities	$        30,500
Property,plant, and equipment:			Owner Equity
Land		$         12,500	Common Stock	$        34,000
Delivery Trucks		$         21,500	Retained Earnings	$                 -
Property,plant, and equipment-net		$         34,000	Total Owner`s Equity	$        34,000
Total Assets		$         64,500	Total Liabilities	$        64,500

Working:

LASER DELIVERY SERVICES, INC.
Balance Sheet
At December 31
Assets			Liabilities
Current assets:			Current Liabilities	0
Cash		34000-2000-1500	Long Term Liabilities
Total Current Assets		30500	Notes Payable	12500+18000
			Total Liabilities	30500
Property,plant, and equipment:			Owner Equity
Land		12500	Common Stock	34000
Delivery Trucks		20000+1500	Retained Earnings	0
Property,plant, and equipment-net		34000	Total Owner`s Equity	34000
Total Assets		64500	Total Liabilities	64500

Notes:

1) New motor cost of truck is capitalized to truck account.

2) Transaction E is the personal transaction of stockholder, so it will not be considered here.