The following is a list of account balances for Pick-A-Pet, Inc., as of June 30, Year 3: Accounts Payable $ 349,200
Accounts Receivable 419,200
Cash 732,600
Common Stock 662,100
Equipment 58,400
Logo and Trademarks 421,600
Long-term Notes Payable 268,900
Retained Earnings 470,100
Software 118,500
The company entered into the following transactions during July, Year 3. Stockholders contribute $300,000 cash for additional ownership shares and the company borrows $150,000 in cash from a bank to buy new equipment by signing a formal agreement to repay the loan in 2 years. No other transactions took place during July, Year 3.
Required:
a. Prepare a classified balance sheet for the company at June 30, Year 3.
b. Show the effects of the July transactions on the basic accounting equation.
c. Prepare the journal entries that would be used to record the transactions.

Pick-A-Pet, Inc

a. Classified Balance Sheet as of June 30, Year 3:

Assets

Current Assets:

Cash                       $1,182,600

Accounts Receivable 419,200     $1,601,800

Equipment                   58,400

Software                     118,500

Logo & Trademarks  421,600      $598,500

Total assets                               $2,200,300

Liabilities and Equity:

Current Liabilities:

Accounts Payable                      $ 349,200

Long-term Liabilities:

Long-term Notes Payable          $418,900

Total liabilities                             $768,100

Equity:

Common Stock      962,100

Retained Earnings 470,100 $1,4322,200

Total liabilities + equity         $2,200,300

b. Effects of the July transactions on the basic accounting equation:

Assets = Liabilities + Equity

1. Stockholders contribute $300,000 cash for additional ownership shares

Assets (Cash + $300,000) = Liabilities + Equity (Common Stock + $300,000)

2. Company borrows $150,000 in cash from a bank to buy new equipment by signing a formal agreement to repay the loan in 2 years.

Assets (Cash + $150,000) = Liabilities (Long-term Notes Payable + $150,000)  + Equity

c. Journal Entries to record the July transactions:

1. Debit Cash $300,000

Credit Common Stock $300,000

To record the additional capital contribution by stockholders.

2. Debit Cash $150,000

Credit Long-term Notes Payable $150,000

To record the borrowing of cash from a bank, repayable in 2 years.

Explanation:

a) Data and Calculations:

Accounts Payable $ 349,200

Accounts Receivable 419,200

Cash 732,600

Common Stock 662,100

Equipment 58,400

Logo and Trademarks 421,600

Long-term Notes Payable 268,900

Retained Earnings 470,100

Software 118,500

July Year 3 Transactions and Effects on accounts:

Cash                   732,600

Common Stock 300,000

Notes Payable   150,000

Cash                1,182,600

Common Stock  662,100

Cash                  300,000

Common Stock 962,100

Long-term Notes Payable 268,900

Cash                                   150,000

Long-term Notes Payable 418,900

Modified account balances:

Cash                1,182,600

Accounts Receivable 419,200

Equipment 58,400

Software 118,500

Logo and Trademarks 421,600

Accounts Payable $ 349,200

Long-term Notes Payable 418,900

Common Stock 962,100

Retained Earnings 470,100

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