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Econ 102 Chapter 3 Homework
- Course
- Econ 102
- Institution
- Queens College
ECON 102 HW - Chap 3: The Accounting Cycle Capturing Economic Events
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Chapter 3 HW1. Glenn Grimes is the founder and president of Heartland Construction, a real estate
development venture. The business transactions during February while the company was
being organized are listed as follows.
Feb. 1 Grimes and several others invested $600,000 cash in the business in exchange for 30,000
shares of capital stock.
Feb. 10 The company purchased office facilities for $360,000, of which $120,000 was applicable
to the land and $240,000 to the building. A cash payment of $72,000 was made and a note
payable was issued for the balance of the purchase price.
Feb. 16 Computer equipment was purchased from PCWorld for $14,400 cash.
Feb. 18 Office furnishings were purchased from Hi-Way Furnishings at a cost of $10,800. A
$1,200 cash payment was made at the time of purchase, and an agreement was made to pay the
remaining balance in two equal installments due March 1 and April 1. Hi-Way Furnishings did
not require that Heartland sign a promissory note.
Feb. 22 Office supplies were purchased from Office World for $360 cash.
Feb. 23 Heartland discovered that it paid too much for a computer printer purchased on February
16. The unit should have cost only $359, but Heartland was charged $395. PCWorld promised to
refund the difference within seven days.
Feb. 27 Mailed Hi-Way Furnishings the first installment due on the account payable for office
furnishings purchased on February 18.
Feb. 28 Received $36 from PCWorld in full settlement of the account receivable created on
February 23.
a. Prepare journal entries to record the above transactions. Select the appropriate
account titles from the following chart of accounts:
, b. Indicate the effects of each transaction on the company's assets, liabilities, and
owners' equity for the month of February. The Feb. 1 transaction is provided for
you.
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