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Chad Polovick Organized A New Company Cap Universe Inc The

Chad Polovick organized a new company called Cap Universe Inc. that operates a small store in a mall specializing in baseball caps with logos. The company issued stock, borrowed funds from the bank, purchased inventory and supplies, placed advertisements, and made its first sales in the first two weeks of operations. The transactions are recorded to show the effects on the company's assets, liabilities, shareholders' equity, revenues, and expenses.

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hassan taimour
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262 views1 page

Chad Polovick Organized A New Company Cap Universe Inc The

Chad Polovick organized a new company called Cap Universe Inc. that operates a small store in a mall specializing in baseball caps with logos. The company issued stock, borrowed funds from the bank, purchased inventory and supplies, placed advertisements, and made its first sales in the first two weeks of operations. The transactions are recorded to show the effects on the company's assets, liabilities, shareholders' equity, revenues, and expenses.

Uploaded by

hassan taimour
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Chad Polovick organized a new company Cap Universe Inc

The #868
Chad Polovick organized a new company, Cap Universe Inc. The company operates a small
store in an area mall and specializes in baseball- type caps with logos printed on them. Chad,
who is never without a cap, believes that his target market is college students. You have been
hired to record the transactions occurring in the first two weeks of operations: May + Issued
2000 shares for $ 20 per share. May + Borrowed $ 60,000 from the bank to provide additional
funding to begin operations. The note is due in two years with interest at 10 percent
annually.May 1 Paid $ 1,500 for the current month’s rent and another $ 1,500 for next month’s
rent.May 1 Paid $ 2,400 for a one-year fire insurance policy (recorded as a prepaid
expense).May 3 Purchased furniture and fixtures for the store for $ 15,000 on account. The
amount is due within 30 days.May 4 Purchased for $ 2,800 cash a supply of University of
Waterloo, York University, and Saint Mary’s University baseball caps to be sold online.May 5
Placed advertisements on Google for a total of $ 350 cash.May 9 Sold caps for a total of $
1,700, half of which was charged on account. The cost of the caps sold was $ 900.May 10
Made full payment for the furniture and fixtures purchased on account on May 3.May 14
Received $ 210 from a customer on account. Required1. Prepare a journal entry to record each
of the transactions. Be sure to categorize each account as an asset (A), a liability (L),
shareholders’ equity (SE), a revenue (R), or an expense (E).2. Complete the tabulation below
for each of the transactions, indicating the effect (+ for increase and – for decrease) of each
transaction. The first transaction is provided as an example. (Remember that A = L + SE, R – E
= NE, and NE affects SE through retained earnings.) Write “N” if there is no effect.
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