jabarca84
May 17, 2009, 01:29 PM
I have to determine the financial statement effects of various transactions. Here is the scenerio.
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, theyare the only stockholders. During the first month (January 2005), the company had the following six events:
a. Collected a total of $40,000 from the organizers and, in turn, issued the shares of stock.
b. 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 15 years.
c. 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.
d. Purchased supplies for $3,000 cash.
e. Sold one acre of land for $4,000 cash to another company.
f. Lent one of the shareholders $5,000 for moving costs, receiving a signed six-month note from the shareholder.
1. Was Lester's Home Healthcare Services organized as a partnership or corporation? Explain the basis of the answer.
2. During the first month, the records of the company were inadequate. You were asked to prepare the summary of the proceeding transactions. To develop a quick assessment of their economic effects of Lester's Home Healthcare Services, you have decided to complete a spreadsheet that follows and use plus (+) for increases and minus (-) for dereases for each account.
3. Did you include on the completed spreadsheet, provide the follwing amounts (show computations):
a. Total assets at the end of the month.
b. Total liablities at the end of the month.
c. Tota 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 nvestment in assets primarily come from liablities or stockholders' equity?
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, theyare the only stockholders. During the first month (January 2005), the company had the following six events:
a. Collected a total of $40,000 from the organizers and, in turn, issued the shares of stock.
b. 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 15 years.
c. 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.
d. Purchased supplies for $3,000 cash.
e. Sold one acre of land for $4,000 cash to another company.
f. Lent one of the shareholders $5,000 for moving costs, receiving a signed six-month note from the shareholder.
1. Was Lester's Home Healthcare Services organized as a partnership or corporation? Explain the basis of the answer.
2. During the first month, the records of the company were inadequate. You were asked to prepare the summary of the proceeding transactions. To develop a quick assessment of their economic effects of Lester's Home Healthcare Services, you have decided to complete a spreadsheet that follows and use plus (+) for increases and minus (-) for dereases for each account.
3. Did you include on the completed spreadsheet, provide the follwing amounts (show computations):
a. Total assets at the end of the month.
b. Total liablities at the end of the month.
c. Tota 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 nvestment in assets primarily come from liablities or stockholders' equity?