Music Mart
Music Mart
Balance Sheet
As Of January 4
Assets Liabilities and Owner’s Equity
Cash $ 25,636 Notes Payable $ 6,500
Land 12,000
Inventory 4,700 Paid-in Capital 25,000
Accounts Receivable 2620 Accounts Payable 5,000
Prepaid Insurance 1,224 Long Term Debt 9,000 Retained Earnings 680
Total $ 46,180 Total $ 46,180
1. The store purchased and received merchandise for inventory for $5000, agreeing to pay within 30 days.
= Inventory – 5000, Accounts Receivable – 5000
2. Merchandise costing $1,500 was sold for $2,300. which was received in Cash.
= Cash - $2300 , Inventory – 1,500, Retained Earnings – 800
3. Merchandise costing $1,700 was sold for $2,620, the customers agreeing to pay $2620 within 30 days.
= Inventory – 1700, Accounts Receivable $2620, Retained Earnings - $920
4. The store purchased a 3-year fire insurance policy for $1224, paying cash.
= Cash – 1224, Prepaid Insurance – 1224
5. The store purchased 2 lots of land of equal size for a total of $24,000. It paid $6000 In cash and gave a 10-year mortgage for $18,000.
= Long term debt – 18,000, cash – 6000, LAND – 24,000
6. The store sold one of the 2 lots of land for $12,000. It received $3,000 cash and in addition the buyer assumed $9,000 of the mortgage. That is, music mart became no longer responsible for this half.
= Cash – 3.000, Land – 12,000, Long term debt – 9000
7. Smith received a bona fide offer of $33,000 for the business; although this equity was then only $26,970 he rejected the offer. It was evident that the store had already acquired goodwill of $6,030. = NONE
8. Smith withdrew $1,000 cash from the store’s bank account for his personal use.
= CASH – 1000, Retained Earnings – 1,000
9. Smith took merchandise costing $750 for his own use.
= Inventory - $750, retained earnings – 750
10. Smith learned that the individual who purchased the land subsequently sold it for $14,000. The lot still owned by Music Mart was
Balance Sheet
As Of January 4
Assets Liabilities and Owner’s Equity
Cash $ 25,636 Notes Payable $ 6,500
Land 12,000
Inventory 4,700 Paid-in Capital 25,000
Accounts Receivable 2620 Accounts Payable 5,000
Prepaid Insurance 1,224 Long Term Debt 9,000 Retained Earnings 680
Total $ 46,180 Total $ 46,180
1. The store purchased and received merchandise for inventory for $5000, agreeing to pay within 30 days.
= Inventory – 5000, Accounts Receivable – 5000
2. Merchandise costing $1,500 was sold for $2,300. which was received in Cash.
= Cash - $2300 , Inventory – 1,500, Retained Earnings – 800
3. Merchandise costing $1,700 was sold for $2,620, the customers agreeing to pay $2620 within 30 days.
= Inventory – 1700, Accounts Receivable $2620, Retained Earnings - $920
4. The store purchased a 3-year fire insurance policy for $1224, paying cash.
= Cash – 1224, Prepaid Insurance – 1224
5. The store purchased 2 lots of land of equal size for a total of $24,000. It paid $6000 In cash and gave a 10-year mortgage for $18,000.
= Long term debt – 18,000, cash – 6000, LAND – 24,000
6. The store sold one of the 2 lots of land for $12,000. It received $3,000 cash and in addition the buyer assumed $9,000 of the mortgage. That is, music mart became no longer responsible for this half.
= Cash – 3.000, Land – 12,000, Long term debt – 9000
7. Smith received a bona fide offer of $33,000 for the business; although this equity was then only $26,970 he rejected the offer. It was evident that the store had already acquired goodwill of $6,030. = NONE
8. Smith withdrew $1,000 cash from the store’s bank account for his personal use.
= CASH – 1000, Retained Earnings – 1,000
9. Smith took merchandise costing $750 for his own use.
= Inventory - $750, retained earnings – 750
10. Smith learned that the individual who purchased the land subsequently sold it for $14,000. The lot still owned by Music Mart was