Reference no: EM13878886

Athletic Performance Company (APC) was incorporated as a private company. The company's accounts included the following at July 1:

During the month of July, the company had the following activities:

a. Issued 2,000 shares of common stock for $ 200,000 cash.

b. Borrowed $ 30,000 cash from a local bank, payable in two years.

c. Bought a building for $ 141,000; paid $ 41,000 in cash and signed a three- year note for the balance.

d. Paid cash for equipment that cost $ 100,000.

e. Purchased supplies for $ 10,000 on account.

Required:

1. Analyze transactions (a)-(e) to determine their effects on the accounting equation. Use a spreadsheet format with a column for each account, enter the July 1 amounts in the first line under the account headings, and calculate ending balances as shown in Exhibit 2.5.

2. Record the transaction effects determined in requirement 1 using journal entries.

3. Summarize the journal entry effects from requirement 2 using T- accounts.

4. Prepare a trial balance at July 31.

5. Prepare a classified balance sheet at July 31.

6. As of July 31, has the financing for APC's investment in assets primarily come from liabilities or stockholders' equity?