Granger Service Company, Inc., was organized by Ted Granger and five other inves

Question

Granger Service Company, Inc., was organized by Ted Granger and five other investors. The following activities occurred during the year:

Received $70,000 total cash from the six investors; each investor was issued 8,400 shares of common stock with a par value of $0.10 per share.

Purchased equipment for use in the business at a cost of $18,000; one-fourth was paid in cash and the company signed a note for the balance (due in six months).

Signed an agreement with a cleaning service to pay $120 per week for cleaning the corporate offices next year.

Received an additional contribution from investors who provided $3,000 in cash and land valued at $15,000 in exchange for 1,000 shares of stock in the company.

Lent $2,500 to one of the investors who signed a note due in six months.

Ted Granger borrowed $7,000 for personal use from a local bank, signing a one-year note.

1. Create T-accounts for the following accounts: Cash, Notes Receivable, Equipment, Land, Notes Payable, Common Stock, and Additional Paid-in Capital. Beginning balances are $0. For each of the preceding transactions, record the effects of the transaction in the appropriate T-accounts. Include good referencing for each T-account.

2. Using the balances in the T-accounts, fill in the following amounts for the accounting equation:

Explanation / Answer

1. T-accounts:

Cash:

Notes Receivable:

Equipment:

Land:

Notes Payable:

Common Stock:

Additional paid-in Capital:

Beginning balance 0 Equipment 4,500 Common Stock 5,040 Note Receivable 2,500 Additional Paid in Capital 64,960 Common Stock 100 Aditional Paid in Capital 2,900 Ending balance 66,000

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