Question

[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:

1. Received $79,000 cash from the six investors; each investor was issued 9,300 shares of common stock with a par value of $0.10 per share.
2. Purchased equipment for use in the business at a cost of $27,000; one-fourth was paid in cash and the company signed a note for the balance (due in six months).
3. Signed an agreement with a cleaning service to pay $210 per week for cleaning the corporate offices next year.
4. Received an additional contribution from investors who provided $3,900 in cash and land valued at $24,000 in exchange for 1,900 shares of stock in the company.
5. Lent $3,400 to one of the investors, who signed a note due in six months.
6. Bennett Griffin borrowed $7,900 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.

Answer 1

(1) -- For each of the preceding transactions, record the effects of the transaction in the appropriate T-accounts.

Answer -

Note - There will be No Entry for transaction (3) and (6)

.

Cash
(1)	$79000	$6750 [$27000 * (1/4)]	(2)
(4)	$3900	$3400	(5)
	.
End Bal.	$72750

.

Notes Receivable
(5)	$3400
.		.	.
End Bal.	$3400

.

Equipment
(2)	$27000
		.	.
End Bal.	$27000

.

Land
(4)	$24000
		.	.
End Bal.	$24000

.

Notes Payable
		$20250 [$27000 - $6750]	(2)
	.
End Bal.		$20250

.

Common Stock
		$5580 [(9300 shares * $0.10) * 6 investors]	(1)
		$190 [1900 shares * $0.10 ]	(4)
	.
End Bal.		$5770

.

Additional Paid-in Capital
		$73420 [$79000 - $5580]	(1)
		$27710 [$3900+$24000-$190]	(4)
	.
End Bal.		$101130