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# Utilizing "T" Accounts

Need help with setting up a "T" account...
also see attachment.....

1) Betty and her friend each invested \$50,000 in cash (for a total of \$100,000) in exchange for shares of common stock in Bobbie's Book Store.

2) On January 1, 2005, purchased new equipment for cash costing \$70,000

3) Depreciation on the new equipment during 2005 was \$800

4) Paid cash for rent expense of \$45,000.

5) Purchase a small lot next to the store for \$20,000. Paid cash for \$5,000 and took out a loan for the remainder.

6) During 2005, customers purchased \$300,000 of books. Of that amount \$250,000 has been collected from customers
in cash and the remaining amounts are yet to be collected (an account receivable).

7) Inventory purchases totaled \$200,000 for the year. All purchases were paid for in cash.

8) Interest due on the loan in (5) is \$100 and is due but not yet paid.

#### Solution Preview

Need help with setting up a "T" account...
also see attachment.....

1) Betty and her friend each invested \$50,000 in cash (for a total of \$100,000) in exchange for shares of common stock in Bobbie's Book Store.

2) On January 1, ...

#### Solution Summary

This explains the prepration of "T" Account. The depreciation on the new equipment during 2005 is determined.

\$2.19