Granger Service Company Inc was organized by Ted Granger and five other investor

Question

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

a: Received $63,000 cash from the investors; each was issued 1,400 shares of capital stock.
b. Purchased equipment for use in the business at a cost of $20,000; one-fourth was paid in cash and the company signed a note for the balance (due in six months).
c. Signed an agreement with a cleaning service to pay $120 per week for cleaning the corporate offices
d. Received an additional contribution from investors who provided $4,000 in cash and land valued at $13,00 in exchange for stock in the company.
e. Lent $2,500 to one of the investors who signed a note due in six months.
f. Ted Granger borrowed $10,000 for personal use from a local bank, signing a one year note.

Required:

1. Create T-accounts for the following accounts: Cash, Note Receivable, Equipment, Land, Note Payable, and Contributed 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 and totals for each T-account.

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

Assets$________ = Liabilities $_________ + Stockholders' Equity $_____________

3. Explain your response to events (c) and (f)

Explanation / Answer

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Cash

To common stock          63000

By equipment 5000

By note receivable 1500

To common stock 4000

       

Bal.                   60500

Note Receivable

To cash 2500

Bal.                 2500

        Equipment

To cash            20000

Bal.    20000

Land

To common stock 13000

Bal.             13000

Note payable

            40000

Equipment 15000

Bal.     40000       

Common Stock

By cash 63000

By cash 4000

By land 13000

Bal.     80000

       

Assets =60500+2500+20000+13000 = 95000

Liabilities =15000

Common stock = 80000

Transaction (c) is not recorded in the books as it is just a agreement and not a transaction

Further transaction (f) is not recorded as it is a personal transaction and njot business transaction

Cash

To common stock          63000

By equipment 5000

By note receivable 1500

To common stock 4000

       

Bal.                   60500

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