Question

Required information (The following information applies to the questions displayed below.) Griffin Service Company, Inc., was organized by Bennett Griffin and five other investors. The following activities occurred during the year: a. Received $88,000 cash from the six investors; each investor was issued 10,200 shares of common stock with a par value of $0.20 per share. b. Purchased equipment for use in the business at a cost of $36,000; 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 $300 per week for cleaning the corporate offices next year. d. Received an additional contribution from investors who provided $4,800 in cash and land valued at $33,000 in exchange for 2,800 shares of stock in the company. e. Lent $4,300 to one of the investors, who signed a note due in six months. f. Bennett Griffin borrowed $8,800 for personal use from a local bank, signing a one-year note. Required: 1. For each of the preceding transactions, record the effects of the transaction in the appropriate T-accounts. Cash Notes Receivable Beg. Bal. 0 Beg. Bal. 88,000 End. Bal. 88,000 End. Bal. Land Equipment 0 Beg. Bal. Beg. Bal. End. Bal. End. Bal. Notes Payable Common Stock Beg. Bal. 0 Beg. Bal. 0 End. Bal End. Bal. Additional Paid-in Capital 0 Beg. Bal. End. Bal.

Answer 1

B A 1 2 Beg. Bal. 3 a) С Cash $9,000 $4,300 b) 3 4 5 $0 $88,000 $4,800 5 $79,500 8 Equipment $9,000 $27,000 $36,000 6 End. Bal. 7 8 9 b) 10 b) 11 12 13 End. Bal 14 15 16 17 18 19 20 End. Bal 21 Notes payable $27,000 b) $27,000 22 Additional paid-in capital 23 24 $75,760 $37,240 a) d) 25 26 27 End. Bal $113,000 28 Notes Receivable $4,300 29 30 e) 31 32 33 34 End. Bal $4,300

Land $33,000 36 37 d) 38 39 40 41 End. Bal $33,000 42 43 Common stock 44 45 46 $12.240 $560 a) d) 47 48 End. Bal $12,800

Working:

D b) 3 5 А B С 1 Cash 2 Beg. Bal. O =36000*0.25 3 a) 88000 4300 4 d) 4800 5 6 End. Bal. =SUM(B3:B5)-SUM(C2:C3) 7 8 Equipment 9 b) 9000 10 b) =36000-9000 11 12 13 End. Bal =SUM(B9:B12) 14 15 Notes payable 16 =36000-9000 b) 17 Additional paid-in capital =88000-(10200*0.2*6) =4800+33000-(2800*0.2) a) d) 18 19 20 End. Bal 27000 21 22 23 24 25 26 27 End. Bal =75760+37240 28 29 30 e) 4300 31 32 33 34 End. Bal 4300 Notes Receivable