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

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

Step-by-step 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.