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: Received $87,000 cash from each of the two shareholders to form the corporation, in addition to $2,700 in accounts receivable, $6,700 in equipment, a van (equipment) appraised at a fair value of $14,400, and $1,550 in supplies. Gave the two owners each 640 shares of common stock with a par value of $1 per share. Purchased a vacant store for sale in a good location for $430,000, making a $86,000 cash down payment and signing a 10-year mortgage note from a local bank for the rest. Borrowed $57,000 from the local bank on a 10 percent, one-year note. Purchased food and paper supplies costing $11,600 in March; paid cash. Catered four parties in March for $4,900; $1,740 was billed and the rest was received in cash. Sold food at the retail store for $17,250 cash; the food and paper supplies used cost $10,970. (Hint: Record the revenue effect separate from the expense effect.) Received a $490 telephone bill for March to be paid in April. Paid $433 in gas for the van in March. Paid $7,680 in wages to employees who worked in March. Paid a $370 dividend from the corporation to each owner. Purchased $57,000 of equipment (refrigerated display cases, cabinets, tables, and chairs) and renovated and decorated the new store for $23,500 (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.

Cash Accounts Receivable Beg. Bal. Beg. Bal. End. Bal. 0 0 End. Bal. Supplies Equipment Beg. Bal. Beg. Bal. End. Bal. End. Bal. Building Accounts Payable Beg. Bal. Beg. Bal. End. Bal. End. Bal. Note Payable Mortgage Payable Beg. Bal. Beg. Bal. End. Bal. End. Bal. Common Stock Additional Paid-in Capital Beg. Bal. Beg. Bal. End. Bal. End. Bal. Retained Earnings Food Sales Revenue Beg. Bal. Beg. Bal. End. Bal. End. Bal. Supplies Expense Catering Sales Revenue Beg. Bal. Beg. Bal. End. Bal. End. Bal. Utilities Expense Wages Expense Beg. Bal. Beg. Bal. End. Bal. End. Bal. Fuel Expense Beg. Bal. End. Bal.

Answer 1

E I F G H Accounts Receivables Beg. Bal. $ 2,700 March $ 1,740 End. Bal. $ 4,440 A B C D Cash 2 Beg. Bal. $ 87,000 $ 86,000 March March $ 57,000 $ 11,600 March 4 March $ 3,160 $ 433 March 5 March $ 17,250 $ 7,680 March 6 $ 370 March 7 $ 80,500 March 8 9 10 End. Bal. $ (22,173) 11 Supplies 13 Beg. Bal. $ 1,550 $ 10,970 March 14 March $ 11,600 12. Equipment Beg. Bal. $21,100 March $ 57,000 15 End. Bal. $ 78,100 16 17 End. Bal. $ 2,180 18 19 Building 20 Beg. Bal. 21 March $430,000 March $ 23,500 23 24 End. Bal. $453,500 Accounts Payable $ 490 Beg. Bal. March 22 End. Bal. $ 490 25

A B C D E F G H I 25 26 Note Payable $ 57,000 Mortgage Payable $344,000 27 Beg. Bal. March Beg. Bal. March 28 29 30 End. Bal. $ 57,000 End. Bal. $344,000 31 32 Common Stock $ 640 Additional Paid-in Capital Beg. Bal. $111,710 33 Beg. Bal. 34 35 36 End. Bal. $ 640 End. Bal. $111,710 37 38 Retained Earnings Food Sales Revenue $ 17,250 39 Beg. Bal. Beg. Bal. March 40 41 End. Bal. $ 17,250 42 End. Bal. $ - 43 44 Catering Sales Revenue 45 Beg. Bal. $ 4,900 46 Supplies Expense March Beg. Bal. March $ 10,970 47 $ 4,900 End. Bal. $ 10,970 48 End. Bal. 49

A B C D E F G H I 49 Wages Expense 50 Utilities Expense 51 Beg. Bal. 52 March $ 490 53 54 End. Bal. $ 490 Beg. Bal. March $ 7,680 End. Bal. $ 7,680 55 56 Fuel Expense 433 57 Beg. Bal. 58 March $ 59 60 End. Bal. $ 61 433

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