Utilizing "T" Accounts
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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.
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Solution Summary
This explains the prepration of "T" Account. The depreciation on the new equipment during 2005 is determined.
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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, ...
Purchase this Solution
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