Question

J.K. Builders was incorporated on July 1.

a.Received $87,000 cash invested by owners and issued common stock.
b.Bought an unused field from a local farmer by paying $77,000 cash. As a construction site for smaller projects, it is estimated to be worth $82,000 to J.K. Builders.
c.A lumber supplier delivered lumber supplies to J.K. Builders for future use. The lumber supplies would have normally sold for $27,000, but the supplier gave J.K. Builders a 10 percent discount. J.K. Builders has not yet received the $24,300 bill from the supplier.
d.Borrowed $42,000 from the bank with a plan to use the funds to build a small workshop in August. The loan must be repaid in two years.
e.One of the owners sold $27,000 worth of his common stock to another shareholder for $28,000.
Prepare journal entries for the above transactions from the first month of business.

Answer 1

The question addresses the preparation of journal entries for J.K. Builders. The transactions include issuing stock for cash, purchasing land, acquiring lumber supplies on credit, and taking out a loan, along with a note on a private shareholder transaction.

Step-by-step explanation:

The journal entries for J.K. Builders are as follows:

1. Cash $87,000
   Common Stock $87,000
   (To record cash invested by owners issuing common stock)
2. Cash $77,000
   Land $77,000
   (To record the purchase of land for cash)
3. Lumber Supplies $24,300
   Accounts Payable $24,300
   (To record the purchase of lumber supplies on account with a discount)
4. Cash $42,000
   Notes Payable $42,000
   (To record the borrowing of cash from the bank for a future workshop)
5. No entry
   (No entry required for private transactions among shareholders)

These entries would be used to track financial activities in J.K. Builders' accounts, reflecting the company's initial financing, asset acquisition, and borrowing, accurately recording the financial position and transactions of the company in its first month of operation.