How much cash did the stockholders invest in Foyle Architects in exchange for common stock?

  

InstructionsFoyle Architects incorporated as licensedarchitects on April 1, 2014. During the first month of the operation of thebusiness, these events and transactions occurred:Journalize transactions,post, and prepare a trial balance. Apr. 1 Stockholders invested $18,000 cash in exchange for common stock of the corporation. 1 Hired a secretary-receptionist at a salary of $375 per week, payable monthly. 2 Paid office rent for the month $900. 3 Purchased architectural supplies on account from Burlington Company $1,300. 10 Completed blueprints on a carport and billed client $1,900 for services. 11 Received $700 cash advance from J. Madison to design a new home. 20 Received $2,800 cash for services completed and delivered to M. Svetlana. 30 Paid secretary-receptionist for the month $1,500. 30 Paid $300 to Burlington Company for accounts payable due. The company uses these accounts: Cash,Accounts Receivable, Supplies, Accounts Payable, Unearned Service Revenue,Common Stock, Service Revenue, Salaries and Wages Expense, and Rent Expense.Instructions (a) Journalize the transactions, including explanations. (b) Post to the ledger T-accounts. (c) Prepare a trial balance on April 30, 2014. c) Cash $18,800 Tot. trial balance $24,400 (c) Cash $18,800 Tot. trial balance

Introduction:

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Foyle Architects is a recently established business that consists of licensed architects and was incorporated on April 1, 2014. During its initial days of operation, the business had several transactions and events that took place, including investment by stockholders, hiring of a secretary-receptionist, rent payments, and several others that would help the business to establish its financial stability.

Description:

The establishment of Foyle Architects as licensed architects was a significant milestone for its parent business. With a vision to provide top-notch architectural services to the clients, the business had a series of transactions that set the foundation of its financial stability. These transactions included the investment of $18,000 cash by the stockholders in exchange for common stock of the corporation. The first month of operations also saw the hiring of a secretary-receptionist at a salary of $375 per week, payable monthly, and payment of $900 as office rent for the month.

Apart from these, the business also purchased architectural supplies worth $1,300 from Burlington Company on account. It completed blueprints on a carport and billed the client for services of $1,900. Foyle Architects also received a $700 cash advance from J. Madison to design a new home and $2,800 cash for services completed and delivered to M. Svetlana.

To maintain its financial stability, the business paid the secretary-receptionist a salary of $1,500 per month and $300 to Burlington Company for accounts payable due. To ensure smooth financial reporting, Foyle Architects uses several accounts, including Cash, Accounts Receivable, Supplies, Accounts Payable, Unearned Service Revenue, Common Stock, Service Revenue, Salaries and Wages Expense, and Rent Expense.

To keep track of all these transactions and maintain accurate financial reporting, the business had to journalize all transactions, prepared the trial balance, and posted these to the ledger T-accounts. As a result, the business was reasonably stable within the first month of its operations.

Objectives:

1. To understand the importance of recording transactions accurately and journalizing them.
2. To gain knowledge on how to post transactions to T-accounts.
3. To learn how to prepare a trial balance and its significance in the accounting process.

Learning Outcomes:

After completing this task, the learner will be able to:

1. Record the transactions of Foyle Architects accurately and journalize them properly.
2. Understand how to post the transactions to T-accounts and maintain the company’s ledger.
3. Prepare a trial balance efficiently and validate the accuracy of the company’s financial records.
4. Identify and categorize the different accounts used in the accounting process, such as Cash, Accounts Receivable, Accounts payable, and so on.

Headings:
1. Introduction to Journalizing Transactions
2. Understanding T-accounts and Ledger Posting
3. Trial Balance Preparation and its Importance
4. Identification of Different Accounts

Solution 1: Journal Entries and Trial Balance

(a) Journal Entries

April 1 – Stockholders’ Investment
Cash 18,000
Common Stock 18,000

April 1 – Secretary-Receptionist Hired
Salaries and Wages Expense 1,500
Cash 1,500

April 2 – Office Rent Paid
Rent Expense 900
Cash 900

April 3 – Purchased Architectural Supplies on Account
Supplies 1,300
Accounts Payable 1,300

April 10 – Completed Blueprints and Billed Client
Accounts Receivable 1,900
Service Revenue 1,900

April 11 – Received Cash Advance
Cash 700
Unearned Service Revenue 700

April 20 – Completed Services and Received Cash
Cash 2,800
Service Revenue 2,800

April 30 – Paid Secretary-Receptionist Salary
Salaries and Wages Expense 1,500
Cash 1,500

April 30 – Paid Accounts Payable
Accounts Payable 300
Cash 300

(b) Ledger T-Accounts

Cash
18,000 (Apr. 1 – Stockholders’ Investment)
1,500 (Apr. 1 – Secretary-Receptionist Hired)
900 (Apr. 2 – Office Rent Paid)
– (Apr. 10 – Completed Blueprints and Billed Client)
700 (Apr. 11 – Received Cash Advance)
2,800 (Apr. 20 – Completed Services and Received Cash)
1,500 (Apr. 30 – Paid Secretary-Receptionist Salary)
300 (Apr. 30 – Paid Accounts Payable)
24,400 (Apr 30 – Trial Balance)

Accounts Receivable
– (Apr. 1 – Stockholders’ Investment)
1,900 (Apr. 10 – Completed Blueprints and Billed Client)
1,900 (Apr. 30 – Trial Balance)

Supplies
1,300 (Apr. 3 – Purchased Architectural Supplies on Account)
– (Apr. 30 – Trial Balance)

Accounts Payable
– (Apr. 1 – Stockholders’ Investment)
1,300 (Apr. 3 – Purchased Architectural Supplies on Account)
300 (Apr. 30 – Paid Accounts Payable)
1,000 (Apr. 30 – Trial Balance)

Unearned Service Revenue
– (Apr. 1 – Stockholders’ Investment)
700 (Apr. 11 – Received Cash Advance)
– (Apr. 30 – Trial Balance)

Common Stock
18,000 (Apr. 1 – Stockholders’ Investment)
18,000 (Apr. 30 – Trial Balance)

Service Revenue
– (Apr. 1 – Stockholders’ Investment)
1,900 (Apr. 10 – Completed Blueprints and Billed Client)
2,800 (Apr. 20 – Completed Services and Received Cash)
4,700 (Apr. 30 – Trial Balance)

Salaries and Wages Expense
– (Apr. 1 – Stockholders’ Investment)
1,500 (Apr. 1 – Secretary-Receptionist Hired)
1,500 (Apr. 30 – Paid Secretary-Receptionist Salary)
3,000 (Apr. 30 – Trial Balance)

Rent Expense
– (Apr. 1 – Stockholders’ Investment)
900 (Apr. 2 – Office Rent Paid)
900 (Apr. 30 – Trial Balance)

(c) Trial Balance on April 30, 2014
Cash 18,800
Accounts Receivable 1,900
Supplies 1,300
Accounts Payable 1,000
Unearned Service Revenue –
Common Stock 18,000
Service Revenue 4,700
Salaries and Wages Expense 3,000
Rent Expense 900
Total 49,600

Solution 2: Financial Analysis

Scenario: Foyle Architects is a newly incorporated business that began operations on April 1, 2014. The company provides architectural services to clients and has experienced various financial transactions in its first month of operation.

Key findings:

1. Foyle Architects received $18,000 from stockholders on April 1, 2014, in exchange for common stock of the corporation. This funding will provide the necessary financial resources for the company’s initial operations.

2. The company hired a secretary-receptionist on April 1, 2014, at a weekly salary of $375, payable monthly. This expense is a necessary cost for the successful operation of the business, which will enable smooth communication with clients and suppliers.

3. Foyle Architects paid office rent of $900 for the month on April 2, 2014. This expense is essential for the business to function in an appropriate location.

4. The company purchased architectural supplies on account from Burlington Company for $1,300 on April 3, 2014. This transaction provides necessary resources for the successful operations of the business.

5. On April 10, 2014 Foyle Architects completed blueprints on a carport and billed the client $1,900 for services. This revenue generation shows that the business is successful in providing architectural services.

6. The company received a $700 cash advance from J. Madison to design a new home on April 11, 2014. This cash advance shows that the business has several clients lined up for their services.

7. Foyle Architects received $2,800 cash for services completed and delivered to M. Svetlana on April 20, 2014. This revenue shows that the business is successful in generating revenue from providing architectural services.

8. The company paid the secretary-receptionist for the month $1,500 on April 30, 2014. This expense is necessary for the successful operation of the business.

9. Foyle Architects paid $300 to Burlington Company for accounts payable due on April 30, 2014. This payment was necessary to keep the current account payable balance up to date.

Based on the above analysis, Foyle Architects has the potential to be a successful business in providing architectural services. The company has started well and shows promise for continued success in the future.

Suggested Resources/Books:

1. Principles of Accounting Volume 1: Financial Accounting
2. Financial Accounting: Tools for Business Decision Making
3. Accounting for Small Business Owners

Similar Asked Questions:

1. What is the importance of journalizing transactions in accounting?
2. How do you prepare a trial balance?
3. What are T-accounts and how are they used in accounting?
4. How do you record common stock transactions in accounting?
5. What are the different types of accounts used in accounting?InstructionsFoyle Architects incorporated as licensedarchitects on April 1, 2014. During the first month of the operation of thebusiness, these events and transactions occurred:Journalize transactions,post, and prepare a trial balance. Apr. 1 Stockholders invested $18,000 cash in exchange for common stock of the corporation. 1 Hired a secretary-receptionist at a salary of $375 per week, payable monthly. 2 Paid office rent for the month $900. 3 Purchased architectural supplies on account from Burlington Company $1,300. 10 Completed blueprints on a carport and billed client $1,900 for services. 11 Received $700 cash advance from J. Madison to design a new home. 20 Received $2,800 cash for services completed and delivered to M. Svetlana. 30 Paid secretary-receptionist for the month $1,500. 30 Paid $300 to Burlington Company for accounts payable due. The company uses these accounts: Cash,Accounts Receivable, Supplies, Accounts Payable, Unearned Service Revenue,Common Stock, Service Revenue, Salaries and Wages Expense, and Rent Expense.Instructions (a) Journalize the transactions, including explanations. (b) Post to the ledger T-accounts. (c) Prepare a trial balance on April 30, 2014. c) Cash $18,800 Tot. trial balance $24,400 (c) Cash $18,800 Tot. trial balance

Introduction:

Foyle Architects is a recently established business that consists of licensed architects and was incorporated on April 1, 2014. During its initial days of operation, the business had several transactions and events that took place, including investment by stockholders, hiring of a secretary-receptionist, rent payments, and several others that would help the business to establish its financial stability.

Description:

The establishment of Foyle Architects as licensed architects was a significant milestone for its parent business. With a vision to provide top-notch architectural services to the clients, the business had a series of transactions that set the foundation of its financial stability. These transactions included the investment of $18,000 cash by the stockholders in exchange for common stock of the corporation. The first month of operations also saw the hiring of a secretary-receptionist at a salary of $375 per week, payable monthly, and payment of $900 as office rent for the month.

Apart from these, the business also purchased architectural supplies worth $1,300 from Burlington Company on account. It completed blueprints on a carport and billed the client for services of $1,900. Foyle Architects also received a $700 cash advance from J. Madison to design a new home and $2,800 cash for services completed and delivered to M. Svetlana.

To maintain its financial stability, the business paid the secretary-receptionist a salary of $1,500 per month and $300 to Burlington Company for accounts payable due. To ensure smooth financial reporting, Foyle Architects uses several accounts, including Cash, Accounts Receivable, Supplies, Accounts Payable, Unearned Service Revenue, Common Stock, Service Revenue, Salaries and Wages Expense, and Rent Expense.

To keep track of all these transactions and maintain accurate financial reporting, the business had to journalize all transactions, prepared the trial balance, and posted these to the ledger T-accounts. As a result, the business was reasonably stable within the first month of its operations.

Objectives:

1. To understand the importance of recording transactions accurately and journalizing them.
2. To gain knowledge on how to post transactions to T-accounts.
3. To learn how to prepare a trial balance and its significance in the accounting process.

Learning Outcomes:

After completing this task, the learner will be able to:

1. Record the transactions of Foyle Architects accurately and journalize them properly.
2. Understand how to post the transactions to T-accounts and maintain the company’s ledger.
3. Prepare a trial balance efficiently and validate the accuracy of the company’s financial records.
4. Identify and categorize the different accounts used in the accounting process, such as Cash, Accounts Receivable, Accounts payable, and so on.

Headings:
1. Introduction to Journalizing Transactions
2. Understanding T-accounts and Ledger Posting
3. Trial Balance Preparation and its Importance
4. Identification of Different Accounts

Solution 1: Journal Entries and Trial Balance

(a) Journal Entries

April 1 – Stockholders’ Investment
Cash 18,000
Common Stock 18,000

April 1 – Secretary-Receptionist Hired
Salaries and Wages Expense 1,500
Cash 1,500

April 2 – Office Rent Paid
Rent Expense 900
Cash 900

April 3 – Purchased Architectural Supplies on Account
Supplies 1,300
Accounts Payable 1,300

April 10 – Completed Blueprints and Billed Client
Accounts Receivable 1,900
Service Revenue 1,900

April 11 – Received Cash Advance
Cash 700
Unearned Service Revenue 700

April 20 – Completed Services and Received Cash
Cash 2,800
Service Revenue 2,800

April 30 – Paid Secretary-Receptionist Salary
Salaries and Wages Expense 1,500
Cash 1,500

April 30 – Paid Accounts Payable
Accounts Payable 300
Cash 300

(b) Ledger T-Accounts

Cash
18,000 (Apr. 1 – Stockholders’ Investment)
1,500 (Apr. 1 – Secretary-Receptionist Hired)
900 (Apr. 2 – Office Rent Paid)
– (Apr. 10 – Completed Blueprints and Billed Client)
700 (Apr. 11 – Received Cash Advance)
2,800 (Apr. 20 – Completed Services and Received Cash)
1,500 (Apr. 30 – Paid Secretary-Receptionist Salary)
300 (Apr. 30 – Paid Accounts Payable)
24,400 (Apr 30 – Trial Balance)

Accounts Receivable
– (Apr. 1 – Stockholders’ Investment)
1,900 (Apr. 10 – Completed Blueprints and Billed Client)
1,900 (Apr. 30 – Trial Balance)

Supplies
1,300 (Apr. 3 – Purchased Architectural Supplies on Account)
– (Apr. 30 – Trial Balance)

Accounts Payable
– (Apr. 1 – Stockholders’ Investment)
1,300 (Apr. 3 – Purchased Architectural Supplies on Account)
300 (Apr. 30 – Paid Accounts Payable)
1,000 (Apr. 30 – Trial Balance)

Unearned Service Revenue
– (Apr. 1 – Stockholders’ Investment)
700 (Apr. 11 – Received Cash Advance)
– (Apr. 30 – Trial Balance)

Common Stock
18,000 (Apr. 1 – Stockholders’ Investment)
18,000 (Apr. 30 – Trial Balance)

Service Revenue
– (Apr. 1 – Stockholders’ Investment)
1,900 (Apr. 10 – Completed Blueprints and Billed Client)
2,800 (Apr. 20 – Completed Services and Received Cash)
4,700 (Apr. 30 – Trial Balance)

Salaries and Wages Expense
– (Apr. 1 – Stockholders’ Investment)
1,500 (Apr. 1 – Secretary-Receptionist Hired)
1,500 (Apr. 30 – Paid Secretary-Receptionist Salary)
3,000 (Apr. 30 – Trial Balance)

Rent Expense
– (Apr. 1 – Stockholders’ Investment)
900 (Apr. 2 – Office Rent Paid)
900 (Apr. 30 – Trial Balance)

(c) Trial Balance on April 30, 2014
Cash 18,800
Accounts Receivable 1,900
Supplies 1,300
Accounts Payable 1,000
Unearned Service Revenue –
Common Stock 18,000
Service Revenue 4,700
Salaries and Wages Expense 3,000
Rent Expense 900
Total 49,600

Solution 2: Financial Analysis

Scenario: Foyle Architects is a newly incorporated business that began operations on April 1, 2014. The company provides architectural services to clients and has experienced various financial transactions in its first month of operation.

Key findings:

1. Foyle Architects received $18,000 from stockholders on April 1, 2014, in exchange for common stock of the corporation. This funding will provide the necessary financial resources for the company’s initial operations.

2. The company hired a secretary-receptionist on April 1, 2014, at a weekly salary of $375, payable monthly. This expense is a necessary cost for the successful operation of the business, which will enable smooth communication with clients and suppliers.

3. Foyle Architects paid office rent of $900 for the month on April 2, 2014. This expense is essential for the business to function in an appropriate location.

4. The company purchased architectural supplies on account from Burlington Company for $1,300 on April 3, 2014. This transaction provides necessary resources for the successful operations of the business.

5. On April 10, 2014 Foyle Architects completed blueprints on a carport and billed the client $1,900 for services. This revenue generation shows that the business is successful in providing architectural services.

6. The company received a $700 cash advance from J. Madison to design a new home on April 11, 2014. This cash advance shows that the business has several clients lined up for their services.

7. Foyle Architects received $2,800 cash for services completed and delivered to M. Svetlana on April 20, 2014. This revenue shows that the business is successful in generating revenue from providing architectural services.

8. The company paid the secretary-receptionist for the month $1,500 on April 30, 2014. This expense is necessary for the successful operation of the business.

9. Foyle Architects paid $300 to Burlington Company for accounts payable due on April 30, 2014. This payment was necessary to keep the current account payable balance up to date.

Based on the above analysis, Foyle Architects has the potential to be a successful business in providing architectural services. The company has started well and shows promise for continued success in the future.

Suggested Resources/Books:

1. Principles of Accounting Volume 1: Financial Accounting
2. Financial Accounting: Tools for Business Decision Making
3. Accounting for Small Business Owners

Similar Asked Questions:

1. What is the importance of journalizing transactions in accounting?
2. How do you prepare a trial balance?
3. What are T-accounts and how are they used in accounting?
4. How do you record common stock transactions in accounting?
5. What are the different types of accounts used in accounting?

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