Question

Lisa Frees and Amelia Ellinger have been operating a catering business for several years. In March, the partners plan to expand by opening a retail sales shop. They have decided to form the business as a corporation called Traveling Gourmet, Inc. The following transactions occurred in March:

  1. Received $100,000 cash from each of the two shareholders to form the corporation, in addition to $4,000 in accounts receivable, $9,300 in equipment, a van (equipment) appraised at a fair value of $17,000, and $2,200 in supplies. Gave the two owners each 900 shares of common stock with a par value of $1 per share.
  2. Purchased a vacant store for sale in a good location for $560,000, making a $112,000 cash down payment and signing a 10-year mortgage from a local bank for the rest.
  3. Borrowed $70,000 from the local bank on a 10 percent, one-year note.
  4. Purchased and used food and paper supplies costing $14,830 in March; paid cash.
  5. Catered four parties in March for $6,200; $2,000 was billed, and the rest was received in cash.
  6. Made and sold food at the retail store for $12,900 cash.
  7. Received a $620 telephone bill for March to be paid in April.
  8. Paid $563 in gas for the van in March.
  9. Paid $10,280 in wages to employees who worked in March.
  10. Paid a $500 dividend from the corporation to each owner.
  11. Purchased $70,000 of equipment (refrigerated display cases, cabinets, tables, and chairs) and renovated and decorated the new store for $30,000 (added to the cost of the building); paid cash.

Required:

2. Record in the T-accounts the effects of each transaction for Traveling Gourmet, Inc., in March. Compute ending balances.

Cash Accounts Receivable Beg. Bal. Beg. Bal. End. Bal. 0 0 End. Bal. 0 Supplies Equipment Beg. Bal. Beg. Bal. End. Bal. 0 EndCommon Stock Additional Paid-in Capital Beg. Bal. Beg. Bal. End. Bal. End. Bal. Retained Earnings Food Sales Revenue Beg. Bal

0 0
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Answer #1
cash a/c
particulars debit particulars credit
To capital 200000 building 112000
short term borrowing 70000 stock (food & paper) 14830
account receivables 1930 gas expenses 563
sales (food) 12900 wages 10280
refrigerator 70000
building 30000
balance carried forward 47157
284830 284830
capital a/c
particulars debit particulars credit
capital contributions
cash 200000

account receivables

4000
equipment 17000
balance carried down 221000
221000 221000
stock a/c
particulars debit particulars credit
food and papers 14830 by sales 12900
cash a/c 1930
14830 14830
outstanding expenses a/c
particulars debit particulars credit
telephone bill 620
interest on borrowing 7000
balance carried down 7620
7620 7620
common stock a/c
particulars debit particulars credit
common stock 1800
mortgage loan
particulars debit particulars credit
by store 448000
balance carried down 448000
448000 448000
building
particulars debit particulars credit
cash 112000
mortgage loan 448000
cash 30000
balance carried down 590000
590000 590000
current liabilities
particulars debit particulars credit
short term borrowings 70000
balance carried down 70000

70000

account receivables
particulars debit particulars credit
bal b/d 4000
sale of food 8200
balance carried down 12200
12200 12200
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