Business Sim Corp BSC issued 1 000 common shares to

Kelly #2667
Business Sim Corp. (BSC) issued 1,000 common shares to Kelly in exchange for $ 12,000.
BSC borrowed $ 30,000 from the bank, promising to repay it in two years. BSC paid $ 35,000
for computer equipment with check number 101 and signed a note for $ 5,000 due in six
months. BSC received $ 900 of supplies purchased on account. BSC’s loan contains a clause
(“covenant”) that requires BSC to maintain a ratio of current assets to current liabilities of at
least 1.3.Required:1. Identify the transactions and analyze their accounting equation effects,
using the format shown in the chapter.2. Prepare journal entries for the transactions described
above and post them to T- accounts.3. Assuming BSC entered into no other activities during its
first year ended September 30, pre-pare the company’s classified balance sheet. Include a
balance of zero in Retained Earnings.4. Determine and explain whether BSC is complying with
or violating its loan covenant.View Solution:
Business Sim Corp BSC issued 1 000 common shares to Kelly

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