Grn Wave Company plans to own and operate a storage rental facility. For the fir

Question

Grn Wave Company plans to own and operate a storage rental facility. For the first month of operations, the company has the following transactions. 1. Issue 10,000 shares of common stock in exchange for $32,000 in cash. 2. Purchase land for $19,000. A note payable is signed for the full amount. 3. Purchase storage container equipment for $8,000 cash. 4. Hire three employees for $2,000 per month. 5. Receive cash of $12,000 in rental fees for the current month. 6. Purchase office supplies for $2,000 on account. 7. Pay employees $6,000 for the first month

Explanation / Answer

1. Record each transaction that Grn Wave uses. Accounts are: Cash, Supplies, Land, Equipment, Common Stock, Accounts Payable, Notes Payable, Service Revenue, and Salaries Expense.

Cash                       $32,000
   Common Stock                   $32,000
________________________________
Land                      $19,000
Notes Payable                     $19,000
________________________________
Equipment               $8,000
   Cash                                    $8,000
________________________________
Cash                       $12,000
   Service Revenue                 $12,000
________________________________
Supplies                   $2,000
Accounts Payable                  $2,000
________________________________
Salaries expense      $6,000
     Cash                                    $6,000
________________________________
2. Post each transaction to T-accounts and compute the ending balance of each account. Since this is the first month of operations, all T-accounts have a beginning balnce of zero.

                                           Cash
Common Stock      $32,000      Equipment    $8,000
Service Revenue    $12,000      Salaries exp. $6,000
                            ______________________________
                               $42,000                           $14,000
                             _____________________________
Ending Bal.            $28,000
                             ==========================
                                               Land
Notes Payable      $19,000
                          ____________________________
Ending Balance   $19,000
                          =========================
                                         Notes Payable
                                             Land           $19,000
                          ___________________________
                                             Ending Bal. $19,000
                          ========================
                                               Equipment
Cash                     $8,000
                          ____________________________
Ending Balance   $8,000
                          =========================
                                           Service Revenue
                                             Cash           $12,000
                          ___________________________
                                             Ending Bal. $12,000
                          ========================
                                               Supplies
Accounts Payable $2,000
                          ____________________________
Ending Balance   $2,000
                         =============================
                                               Salaries Expense
Cash                     $6,000
                          ____________________________
Ending Balance     $6,000
                          ============================

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