Question

Precision Builders Construction Company was incorporated by Chris Stoschiek. The following activities occurred during the year a. Received from three investors $51,000 cash and land valued at $26,000, each investor was issued 2,500 shares of common stock with a par value of $0.10 per share c. Lent $3,500 to one of the investors who signed a note due in six months. e Paid $18,000 on the note for the construction equipment in (b) lignore interest) for use in the business at a cost of $46,000, one-fourth was paid in cash and the company signed a note for the balance (due in si Required 1. Create T-accounts for the following accounts: Cash, Notes Rece record the efflects of the transaction in the appropriate T-accounts, Include good referencing for each T-account Cash Notes Receivable Beg Bal Beg Bal End Bal End Bal Equipment Land Beg Bal Beg Ba

Answer 1

1) T-Accounts:
DEBIT	AMOUNT $	CREDIT	AMOUNT $
Cash A/C
a	51000	b	11500
		c	3500
		d	6200
		e	18000
		CB	11800
Equipment A/C
b	46000
Notes Payable A/C
e	18000	b	34500
CB	44500	d	28000
Additional Paid in capital A/C
d (withdrawal)	34200	a	76750	(being for personal purpose)
CB	42550
Notes Receivable A/C
c	3500
Land A/C
a	26000
Common Stock A/C
		a	250
2) The Accounting Equation:
Assets 87300 (ie. 11800+46000+3500+26000) = Liabilities 44500 + Stockholder's Equity 42800(ie. 250+42550)
3) Market Value per share = Book Value / Number of shares = (250 + 42550)/2500 = 42800/2500 = $17.12 per share