Texas Product Corporation begins operation on April 1, 2012. The firm engages in the following transaction during April.
(1) Issues 20,000 shares of $5 par value common stock for $12 per share in cash.
(2) Issues 5,000 shares of $100 par value preferred stock at par value for cash.
(3) Gives $40,000 in cash and 5,000 shares of common stock in exchange for land and a building. The land appears at $25,000 and the building at $75,000 on the balance sheet.
(4) Acquires equipment costing $46,000. It makes cash payment of $8,000 and gives an 8% notes due in one year, for the balance.
(5) Pays transportation cost of $1,200 on equipment in (4).
(6) Pays installation cost of $1,800 on the equipment in (4).
(7) Acquire merchandise inventory costing $60,000 on account.
(8) Pays license fees of $1,300 for the year beginning May 1 in advance.
(9) Discovers that merchandise costing $1,900 from the acquisition in (7) is defective and returns it to the supplier for credit. The firm has not yet paid this account.
(10) Purchase a patent from its creator for $30,000.
(11) Signs an agreement to manufacture a specially designed machine for a customer for $60,000 to be delivered in January of next year. At the time of signing, the customer advances $12,000 of the contract price.
(12) Pays invoices totaling $40,000 from the purchases in (7).
Required:
a. Prepare journal entries and enter the transactions in T-accounts. Indicate whether each account is an asset, a liability, or a stockholder's equity item.
b. Prepare a balance sheet for Texas Product Corporation as of April 30, 2012.