B&L Landscapes, Inc. Mini Practice Part1
Bill Graham started his career mowing lawns for neighbors whilehe was in junior high school. Bill worked summers for the localgolf course while he was in high school and after he graduated, hestarted his own lawn care business, Billâs Lawn Care. In additionto lawn care, he also sells two types of fertilizer. Bill is readyto expand his business and wants to add sprinkler systems to hisproduct offering. Larry Miller has an established sprinkler systembusiness and they have agreed to merge their two businessestogether. They considered the partnership form of business but havedecided to incorporate. You are taking an accounting class at thelocal community college and have been helping Bill keep theaccounting records for his business. He has asked you to stay onand establish and maintain the accounting records for the newcompany, B&L Landscapes, Inc.
Bill and Larry have hired an attorney and filed theincorporation paperwork with the state of Colorado. In the articlesof incorporation, they are authorized to issue 150,000 shares of $1par value common stock and 5,000 shares of $100 par value, 5%,non-cumulative, non-participating preferred stock. The newcorporation will be created on July 1, 2014. The fair value of theassets and liabilities of both companies are as follows:
Account
Billâs Lawn Care
Cash
$12,500
Accounts Receivable
500
Prepaid Insurance
500
Inventory
1,000
Land
8,000
Building
25,000
Equipment
7,500
Accounts Payable
5,000
Notes Payable (due 4/30/2024)
45,000
Larryâs Sprinkler Systems
Cash
$10,000
Accounts Receivable
3,000
Prepaid Insurance
1,000
Inventory
5,000
Equipment
11,000
Accounts Payable
5,000
Bill and Larry have decided that they will each receive 1 shareof common stock for every dollar of working capital (assets lessliabilities) they contribute to the new company. You may assumethat all the assets and liabilities listed above will be part ofthe new company. Additionally, they issue stock as follows:
Jul 1 Issued 30 sharesof preferred stock for $100 per share cash to Billâs father.
Jul 1 Issued 20 sharesof preferred stock for $100 per share cash to Larryâs mother.
Instructions:
Using the chart of accounts provided below, and the Exceltemplate provided with this assignment, prepare journal entries, ingood form, to record the creation of B&L Landscapes, Inc. andthe issuance of stock. Use July 1 for the creation journal entries.Start with Page 1 of the General Journal.Explanations are optional.
Prepare a classified balance sheet for B&L Landscapes, Inc.for July 1, 2014.
During the first year of operations, B&L Inc. earned netincome of $22,500. They also declared a $2,000 dividend on June 10,2015 payable on June 30, 2015. Prepare an allocation of thedividend to each class of stock.
Record the journal entries for the dividend declaration andpayment on Page 2 of the General Journal.Explanations are optional.
Prepare the Stockholdersâ Equity section of the balance sheetfor June 30, 2015.
B&L Landscapes, Inc. Mini Practice Part1
Bill Graham started his career mowing lawns for neighbors whilehe was in junior high school. Bill worked summers for the localgolf course while he was in high school and after he graduated, hestarted his own lawn care business, Billâs Lawn Care. In additionto lawn care, he also sells two types of fertilizer. Bill is readyto expand his business and wants to add sprinkler systems to hisproduct offering. Larry Miller has an established sprinkler systembusiness and they have agreed to merge their two businessestogether. They considered the partnership form of business but havedecided to incorporate. You are taking an accounting class at thelocal community college and have been helping Bill keep theaccounting records for his business. He has asked you to stay onand establish and maintain the accounting records for the newcompany, B&L Landscapes, Inc.
Bill and Larry have hired an attorney and filed theincorporation paperwork with the state of Colorado. In the articlesof incorporation, they are authorized to issue 150,000 shares of $1par value common stock and 5,000 shares of $100 par value, 5%,non-cumulative, non-participating preferred stock. The newcorporation will be created on July 1, 2014. The fair value of theassets and liabilities of both companies are as follows:
Account | Billâs Lawn Care |
|---|---|
Cash | $12,500 |
Accounts Receivable | 500 |
Prepaid Insurance | 500 |
Inventory | 1,000 |
Land | 8,000 |
Building | 25,000 |
Equipment | 7,500 |
Accounts Payable | 5,000 |
Notes Payable (due 4/30/2024) | 45,000 |
Larryâs Sprinkler Systems | |
Cash | $10,000 |
Accounts Receivable | 3,000 |
Prepaid Insurance | 1,000 |
Inventory | 5,000 |
Equipment | 11,000 |
Accounts Payable | 5,000 |
Bill and Larry have decided that they will each receive 1 shareof common stock for every dollar of working capital (assets lessliabilities) they contribute to the new company. You may assumethat all the assets and liabilities listed above will be part ofthe new company. Additionally, they issue stock as follows:
Jul 1 Issued 30 sharesof preferred stock for $100 per share cash to Billâs father.
Jul 1 Issued 20 sharesof preferred stock for $100 per share cash to Larryâs mother.
Instructions:
Using the chart of accounts provided below, and the Exceltemplate provided with this assignment, prepare journal entries, ingood form, to record the creation of B&L Landscapes, Inc. andthe issuance of stock. Use July 1 for the creation journal entries.Start with Page 1 of the General Journal.Explanations are optional.
Prepare a classified balance sheet for B&L Landscapes, Inc.for July 1, 2014.
During the first year of operations, B&L Inc. earned netincome of $22,500. They also declared a $2,000 dividend on June 10,2015 payable on June 30, 2015. Prepare an allocation of thedividend to each class of stock.
Record the journal entries for the dividend declaration andpayment on Page 2 of the General Journal.Explanations are optional.
Prepare the Stockholdersâ Equity section of the balance sheetfor June 30, 2015.
