Question

The following are the transactions of Spotlighter, Inc., for the month of January: a. Borrowed $5,440 from a local bank on a note due in six months. b. Received $6,130 cash from investors and issued common stock to them. c. Purchased $2,500 in equipment, paying $950 cash and promising the rest on a note due in one year. d. Paid $1,050 cash for supplies. e. Bought and received $1,450 of supplies on account. Prepare a classified balance sheet for Spotlighter, Inc., as of January 31.

Answer 1

Classified balance sheet for Spotlighter, Inc., as of January 31.

Assets

Non-Current Assets

Equipment $2,500

Total Non-Current Assets $2,500

Current Assets

Supplies ($1,050 + $1,450) $2,500

Cash ($5,440 + $6,130 - $950 - $1,050) $9,570

Total Current Assets $12,070

Total Assets $14,570

Equity and Liabilities

Equity

Common Stock $6,130

Total Equity $6,130

Liabilities

Note Payable ($5,440 + $1,550) $6,990

Accounts Payable $1,450

Total Liabilities $8,440

Total Equity and Liabilities $14,570

Step-by-step explanation:

First record the transactions and collect Account balances of Assets, Liabilities and Equity to prepare the Balance Sheet.

Recording Transactions.

a.

Cash $5,440 (debit)

Note Payable $5,440 (credit)

b.

Cash $6,130 (debit)

Common Stock $6,130 (credit)

c.

Equipment $2,500 (debit)

Cash $950 (credit)

Note Payable $1,550 (credit)

d.

Supplies $1,050 (debit)

Cash $1,050 (credit)

e.

Supplies $1,450 (debit)

Accounts Payable $1,450 (credit)