55CP_4 - Horngren'S Financial And Managerial Accounting

Question

Canyon Canoe Company is a service-based company that rents canoes for use on local lakes and rivers. Amber and Zack Wilson graduated from college about 10 years ago. They both worked for one of the “Big Four” accounting firms and became CPAs. Because they both love the outdoors, they decided to begin a new business that will combine their love of outdoor activities with their business knowledge. Amber and Zack decide that they will create a new corporation, Canyon Canoe Company, or CCC for short. The business began operations on November 1, 2018. Nov. 1 Received \(16,000 cash to begin the company and issued common stock to Amber and Zack. 2 Signed a lease for a building and paid \)1,200 for the first month’s rent. 3 Purchased canoes for \(4,800 on account. 4 Purchased office supplies on account, \)750. 7 Earned \(1,400 cash for rental of canoes. 13 Paid \)1,500 cash for wages. 15 Paid \(50 dividends to stockholders. 16 Received a bill for \)150 for utilities. (Use separate payable account.) 20 Received a bill for \(175 for cell phone expenses. (Use separate payable account.) 22 Rented canoes to Early Start Daycare on account, \)3,000. 26 Paid \(1,000 on account related to the November 3, 2018, purchase. 28 Received \)750 from Early Start Daycare for canoe rental on November 22, 2018. 30 Paid $100 dividends to stockholders. Requirements  4. Prepare the balance sheet as of November 30, 2018.

Step-by-Step Solution

Answer

In the balance sheet, total assets equals $22,100, total liabilities equals $4,875, and total stockholders’ equity equals $17,225. 

Explanation on Balance Sheet

Balance sheet indicates the balances of assets, liabilities, and owners’ equity of a company for a particular accounting period. 

Details of balance sheet

The balance sheet is shown as follows: 

Canyon Canoe Company
Balance Sheet
November 30, 2018
Assets	Liabilities
Cash	$14,300	Accounts Payable	$4,550
Accounts Receivable	2,250	Utilities Payable	150
Office Supplies	750	Telephone Payable	175
Canoes	4,800	Total Liabilities	$4,875
		Stockholders’ Equity
		Common Stock	16,000
		Retained Earnings	1,225
		Total Stockholders’ Equity	17,225
Total Assets	$22,100	Total Liabilities and Stockholders’ Equity	$22,100