Question

[The following information applies to the questions displayed below.] Laser Delivery Services, Inc. (LDS), was incorporated January 1. The following transactions occurred during the year: Received $27,000 cash from the company's founders in exchange for common stock. Purchased land for $9,000, signing a two-year note (ignore interest). Bought two used delivery trucks at the start of the year at a cost of $9,000 each; paid $2,000 cash and signed a note due in three years for $16,000 (ignore interest). Paid $800 cash to a truck repair shop for a new motor, which increased the cost of one of the trucks. Stockholder Jonah Lee paid $220,000 cash for a house for his personal use. Record the effects of each item using a journal entry.

Answer 1

a.

Date Account Details Debit Credit

Cash $27,000

Common Stock $27,000

b.

Date Account Details Debit Credit

Land $9,000

Notes Payable $9,000

c.

Date Account Details Debit Credit

Vehicles $18,000

Cash $2,000

Notes Payable $16,000

d.

Date Account Details Debit Credit

Vehicles $800

Cash $800

e. This does not require a journal entry as it is a personal transaction.