Question

Help 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: a. Received $95.000 cash from each of the two shareholders to form the corporation. In addition to $3,500 in accounts receivable, $8,300 in equipment, a van (equipment) appraised at a fair value of $16,000 and $1.950 in supplies. Gave the two owners each 800 shares of common stock with a par value of $1 per share. b. Purchased a vacant store for sale in a good location for $510,000, making a $102,000 cash down payment and signing a 10-year mortgage note from a local bank for the rest. c. Borrowed $65.000 from the local bank on a 10 percent, one-year note. d. Purchased food and paper supplies costing $13,200 in March; paid cash. e. Catered four parties in March for $5,700, 91,900 was billed and the rest was received in cash. f. Sold food at the retail store for $17,650 cash: the food and paper supplies used cost $11,130. (Hint: Record the revenue effect separate from the expense effect.) g. Received a $570 telephone bill for March to be paid in April. h. Pald $513. in gas for the van in March, I. Paid $9,280 in wages to employees who worked in March, j. Pald a $450 dividend from the corporation to each owner. k. Purchased $65,000 of equipment (refrigerated display cases, cabinets, tables, and chairs) and renovated and decorated the new store for $27.500 (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 Recevable Beg. Bal Beg. Bal. End. Bal. 0 0 < Prey 5 of 9 Next >

Answer 1

Cash		Accounts Receivable
Beg. bal.	0				Beg. bal.	0
a.	190,000	102,000	b.		a.	3,500
c.	65,000	13,200	d.		e.	1,900
e.	3,800	513	h.
f.	17,650	9,280	i.		End. bal.	5,400
		900	j.
		92,500	k.
End. bal.	58,057
Supplies		Equipment
Beg. bal.	0				Beg. bal.	0
a.	1,950	11,130	f.		a.	24,300
d.	13,200				k.	65,000
End. bal.	4,020				End. bal	89,300
Building		Accounts Payable
Beg. bal.	0				Beg. bal.	0	0
b.	510,000				g.		570
k.	27,500
					End. bal.		570
End. bal.	537,500
Note Payable		Mortgage Payable
Beg. bal.			0		Beg. bal.			0
c.		65,000			b.		408,000
End. bal.		65,000			End. bal.		408,000
Common Stock		Additional Paid-in Capital
Beg. bal.		0			Beg. bal.		0
a.		1,600			a.		218,150
End. bal.		1,600			End. bal.		218,150
Retained Earnings		Food Sales Revenue
Beg. bal.		0			Beg. bal.		0
					f.		17,650
					End. bal.		17,650
Catering Sales Revenue		Supplies Expense
Beg. bal.		0			Beg. bal.	0
e.		5,700			f.	11,130
End. bal.		5,700			End. bal.	11,130
Utilities Expense		Wages Expense
Beg. bal.	0				Beg. bal.	0
g.	570				i.	9,280
End. bal.	570				End. bal.	9,280
Fuel Expense
Beg. bal.	0
h.	513
End. bal.	513