Question

Required information [The following information applies to the questions displayed below.) 2 Griffin Service Company, Inc., was organized by Bennett Griffin and five other investors. The following activities occurred during the year: a. Received $89,000 cash from the six investors, each investor was issued 10,300 shares of common stock with a par value of $0.10 per share. b. Purchased equipment for use in the business at a cost of $37,000; 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 $310 per week for cleaning the corporate offices next year. d. Received an additional contribution from investors who provided $4,900 in cash and land valued at $34,000 in exchange for 2,900 shares of stock in the company. e. Lent $4,400 to one of the investors, who signed a note due in six months. 1. Bennett Griffin borrowed $8,900 for personal use from a local bank, signing a one-year note.

Answer 1

Journal Entries

	Particulars	Dr. Amt	Cr. Amt.
a)	cash A/c                          Dr.	89000
	To Common stock A/c (10300*0.10*6)		6180
	To Additional paid in capital A/c		82820
b)	Equipment A/c                        Dr.	37000
	To Cash A/c		9250
	To Notes Payable A/c		27750
c)	No Entry (only agreement was signed)
d)	Cash A/c                              Dr.	4900
	Land A/c                              Dr.	34000
	To Common stock A/c (2900*0.10)		290
	To Additional paid in capital A/c		38610
e)	Notes receivable A/c Dr.	4400
	To Cash A/c		4400
f)	No Entry (since personal borrowings are not the part of company's Financial statements)

Cash A/c
Opening bal.	Nil	Equipment	9250
Common stock	6180	Notes receivable	4400
Additional paid in capital	82820	Closing Bal.	80250
Additional paid in capital	4900
	93900		93900

Equipment
Opening bal.	Nil	Closing Bal.	37000
Cash	9250
Notes Payable	27750
	37000		37000

Common stock
Closing Bal.	6470	Opening bal.	Nil
		Cash	6180
		Cash	290
	6470		6470

additional paid in capital
Closing Bal.	121430	Opening bal.	Nil
		Cash	82820
		Cash	4610
		Land	34000
	121430		121430

Notes Payable
Closing Bal.	27750	Opening bal.	Nil
		Equipment	27750
	27750		27750

Notes Receivable
Opening bal.	Nil	Closing Bal.	4400
Cash	4400
	4400		4400

Land
Opening bal.	Nil	Closing Bal.	34000
Additional paid in Capital	34000
	34000		34000

Assets (155650 ) = Liabilities( 27750) + Stockholders equity(127900)