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:

Answer 1

1. T-accounts:

Cash:

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

Notes Receivable:

Cash	2,500
Ending balance	2,500

Equipment:

Cash	4,500
Note Payable	13,500
Ending balance	18,000

Land:

Additional Paid in Capital	15,000
Ending balance	15,000

Notes Payable:

		Equipment	13,500
		Ending balance	13,500

Common Stock:

		Cash	5,040
		Cash	100
		Ending balance	5,140

Additional paid-in Capital:

		Cash	64,960
		Land	15,000
		Ending balance	79,960