Question

Casting Crown Construction entered into the following transactions during a recent year: January 2 Purchased a bulldozer for $200,000 by paying $20,000 cash and signing a $180,000 note. January 3 Replaced the steel tracks on the bulldozer at a cost of $20,000, purchased on account. January 30 Wrote a cheque for the amount owed on account for the work completed on January 3. February 1 Replaced the seat on the bulldozer and wrote a cheque for the full $600 cost. March 1 Paid $2,400 cash for the rights to use computer software for a two-year period. Required: 1-a. Analyze the accounting equation effects. (Enter any decreases to accounts with a minus sign.)

Answer 1

1. Accountign Equation
Date	Assets		Liabilities		Stockholders’ Equity
2-Jan	Cash	-$20,000.00	Note Payable (long-term)	$180,000.00
	Equipment	$200,000.00
3-Jan	Equipment	$20,000.00	Accounts Payable	$20,000.00
30-Jan	CAsh	-$20,000.00	Accounts Payable	-$20,000.00
1-Feb	CAsh	-$600.00			Repairs and Maintenance Expense	-$600.00
1-Mar	Cash	-$2,400.00
	Computer Software	$2,400.00

1.b. Journal Entries- Casting Crown Cosntruction
Date	General journal	Dr.	Cr.
2-Jan	Equipment	$200,000
	To cash		$20,000
	To Bills payable		$180,000
	To Record bulldozer purchased
3-Jan	Equipment	$20,000
	To Account payable		$20,000
	TO Record steel tracks replaced
30-Jan	Account payable	$20,000
	To Bank		$20,000
	To Record amount paid by cheque
1-Feb	Repair & Maintainance Expense	$600
	To Bank		$600
	To Record Repair & Maint Expense
1-Mar	Computer software	$2,400
	To Cash		$2,400
	(being right to use computer software acquired)

2 & 3.   Journal Entries- Casting Crown Cosntruction
Date	General journal	Dr.	Cr.
31-Dec	Depreciation Expense - Equipment	$88,000.00
	Accumulated Depreciation		$88,000.00
	(220000/5*2)
31-Dec	Amortisation Expense	$1,000.00
	Accmulated Amortisation		$1,000.00
	( 2400/24 Month* 10 Month)