Question

Granger Service Company, Inc., was organized by Ted Granger and five other investors. The following activities occurred during the year:

a. Received $71,000 total cash from the six investors; each investor was issued 8,500 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 $19,000; one-fourth was paid in cash and the company signed a note for the balance (due in six months). Signed an agreement with a cleaning service to pay $130 per week for cleaning the corporate offices next year.
c. Received an additional contribution from investors who provided $3,100 in cash and land valued at $16,000 in exchange for 1,100 shares of stock in the company.
d. Lent $2,600 to one of the investors who signed a note due in six months. Ted Granger borrowed $7,100 for personal use from a local bank, signing a one-year note.

Required:
Create T-accounts for the above accounts.

Answer 1

Answer:

Granger Service Company, Inc.

T-accounts

Cash

Accounts Titles          Debit       Credit

Common stock          $10,200

APIC - common stock 60,800                  

Equipment                                  $4,750

Common stock             2,200

APIC - common stock     900

Notes Receivable                       2,600

Notes Receivable

Accounts Titles          Debit       Credit

Cash                          $2,600

Common Stock

Accounts Titles          Debit       Credit

Cash                                            $10,200

Cash                                               2,200

                                 

Additional Paid-in Capital

Accounts Titles          Debit       Credit

Cash                                            $60,800

Cash                                                   900

Land                                               16,000

Land

Accounts Titles          Debit       Credit

APIC - common stock $16,000

Equipment

Accounts Titles          Debit       Credit

Cash                          $4,750

Notes payable           14,250

Notes payable

Accounts Titles          Debit       Credit

Equipment                                 $14,250

Explanation:

The T-accounts consist of account titles at the top horizontal line,  a debit column, and a credit column.   It may also look exactly like the letter T.  Otherwise, in modern time, T-accounts are no longer presented in the form of the letter T.  They are now presented in columnar formats, as shown above.