Exercise

Accurate Builders construction company was incorporated by John Davis. Assume the following activities occurred during the year:

a. Received from three investors $60,000 cash and land valued at $35,000; each investor was issued 1,000 shares of common stock with a par value of $0.10 per share.

b. Purchased construction equipment for use in the business at a cost of $36,000; one-fourth was paid in cash and the company signed a note for the balance (due in six months).

c. Lent $2,500 to one of the investors, who signed a note due in six months.

d. John Davis purchased a truck for personal use; paid $5,000 down and signed a one-year note for $22,000.

e. Paid $12,000 on the note for the construction equipment in (b) (ignore interest).

Required:

1. For each of the preceding transactions, record the effects of the transaction in the appropriate T-accounts.

2. Using the balances in the T-accounts, fill in the following amounts for the accounting equation.