Question

! Required information E2-11 Recording Journal Entries and Preparing a Classified Balance Sheet (LO 2-1, LO 2-2, LO 2-5) Assume Down, Inc., was organized on May 1 to compete with Despair, Inc.—a company that sells de-motivational posters and office products. Down, Inc., encountered the following events during its first month of operations. a. Received $60,000 cash from the investors who organized Down, Inc. b. Borrowed $20,000 cash and signed a note due in two years. c. Ordered equipment costing $16,000. d. Purchased $9,000 in equipment, paying $2,000 in cash and signing a six-month note for the balance. e. Received the equipment ordered in (c), paid for half of it, and put the rest on account. E2-11 Part 1 Required: 1. Summarize the financial effects of items (a)-(e) in a table. (Enter any decreases to account balances with a minus sign.) 5 Assets Stockholders' Equity Common Stock Cash Equipment Liabilities ST Notes Payable 0 Accounts Payable 0 LT Notes Payable 0 Beg. 0 0 0 a. b. C. d. e. End. 0 0 0
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Answer 1

	Cash +	Equipment =	Accounts	ST Notes	LT Notes	Common
			Payable +	payable +	Payable +	Stock
Beg. Bal.	0	0	0	0	0	0
a.	60,000					60,000
b.	20,000				20,000
c.	0	0	0	0	0	0
d.	-2,000	9,000		7,000
e.	-8,000	16,000	8,000
End. Bal.	70,000	25,000	8,000	7,000	20,000	60,000
Balance Sheet
Assets				Liabilities
Current assets:			Current liabilities:
Cash			70000	Accounts payable	8000
				ST notes payable	7000
Total Current assets		70000	Total Current liabilities		15000
Property Plant and equipment:		Long-term liabilities:
Equipment		25000	LT Notes payable		20000
Total PPE			25000	Total Liabilities		35000
				Stockholder's equity
				Common Stock	60000
				Retained earnings	0
				Total Stockholder's equity		60000
Total Assets		95000	Total Liabilities and equity		95000