A Discussion On Transaction Spreadsheet
Not what you're looking for?
Lester's Home Healthcare Services (LHHS) was organized on January 1, 2005, by four friends. Each organizer invested $10,000 in the company and, in turn, was issued 8,000 shares of stock. To date, they are the only stockholders. During the first month (January 2005), the company had the following six events:
1. Collected a total of $40,000 from the organizers and, in turn, issued the shares of stock.
2. Purchased a building for $65,000, equipment for $16,000, and three acres of land for $12,000; paid $13,000 in cash and signed a note for the balance, which is due to be paid in 15 years.
3. One stockholder reported to the company that 500 shares of his Lester's stock had been sold and transferred to another stockholder for $5,000 cash.
4. Purchased supplies for $3,000 cash.
5. Sold one acre of land for $4,000 cash to another company.
6. Lent one of the shareholders $5,000 for moving costs, receiving a signed six-month note from the shareholder.
Required:
1. Was Lester's Home Healthcare Services organized as a partnership or corporation? Explain the basis for your answer.
2. During the first month, the records of the company were inadequate. You were asked to prepare the summary of the preceding transactions. To develop a quick assessment of their economic effects on Lester's Home Healthcare Services, you have decided to complete the spreadsheet that follows and to use plus (+) for increases and minus (-) for decreases for each account.
3. Did you include the transaction between the two stockholders?event c?in the spreadsheet? Why?
4. Based only on the completed spreadsheet, provide the following amounts (show computations):
a. Total assets at the end of the month.
b. Total liabilities at the end of the month.
c. Total stockholders' equity at the end of the month.
d. Cash balance at the end of the month.
e. Total current assets at the end of the month.
5. As of January 31, 2005, has the financing for LHHS'S investment in assets primarily come from liabilities or stockholders' equity?
Purchase this Solution
Solution Summary
The solution explains how to prepare a transaction spreadsheet giving brief but step by step calculations and explanations.
Solution Preview
Please see the attached file.
Lester's Home Healthcare Services (LHHS) was organized on January 1, 2005, by four friends. Each organizer invested $10,000 in the company and, in turn, was issued 8,000 shares of stock. To date, they are the only stockholders. During the first month (January 2005), the company had the following six events:
1. Collected a total of $40,000 from the organizers and, in turn, issued the shares of stock.
2. Purchased a building for $65,000, equipment for $16,000, and three acres of land for $12,000; paid $13,000 in cash and signed a note for the balance, which is due to be paid in 15 years.
3. One stockholder reported to the company that 500 shares of his Lester's stock had been sold and transferred to another stockholder for $5,000 cash.
4. Purchased supplies for $3,000 cash.
5. Sold one acre of land for $4,000 cash to another company.
6. Lent one of the shareholders $5,000 for moving costs, receiving a signed six-month note from the shareholder.
Required:
1. Was Lester's Home Healthcare Services ...
Purchase this Solution
Free BrainMass Quizzes
Motivation
This tests some key elements of major motivation theories.
Organizational Behavior (OB)
The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.
Situational Leadership
This quiz will help you better understand Situational Leadership and its theories.
Business Ethics Awareness Strategy
This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.
Paradigms and Frameworks of Management Research
This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.