the partners plan to expand by opening a retail sales shop. They have decided to form the business as a corporation called Traveling Gourmet, Inc. The following transactions occurred in March: L Received $94,000 cash from each of the two shareholders to form the corporation, in addition to $3.400 in accounts receivable, $8,100 in equipment, a van (equipment) appraised at a fair value of $15,800, and $1,900 in supplies. Gave the two owners each 780 shares of common stock with a par value of $1 per share. Purchased a vacant store for sale in a good location for 500,000, making a $100,000 cash down payment and signing a 10-year mortgage note from a local bank for the rest. Borrowed $64,000 from the local bank on a 10 percent, one-year note. 1 Purchased food and paper supplies costing $13.000 in March; paid cash. Catered four parties in March for $5,600. S1.880 was billed and the rest was received in cash. 1. Sold food at the retail store for $17,600 cash, the food and paper supplies used cost $11,110. (Hint: Record the revenue effect separate from the expense effect) 1 Received a $560 telephone bill for March to be paid in April. L Paid $503 in gas for the van in March. i Paid $9,080 in wages to employees who worked in March. i Paid a $440 dividend from the corporation to each owner. Purchased S64,000 of equipment (refrigerated display cases, cabinets, tables, and chairs) and renovated and decorated the new store for $27,000 (added to the cost of the building): paid cash. Required:
the partners plan to expand by opening a retail sales shop. They have decided to form the business as a corporation called Traveling Gourmet, Inc. The following transactions occurred in March: L Received $94,000 cash from each of the two shareholders to form the corporation, in addition to $3.400 in accounts receivable, $8,100 in equipment, a van (equipment) appraised at a fair value of $15,800, and $1,900 in supplies. Gave the two owners each 780 shares of common stock with a par value of $1 per share. Purchased a vacant store for sale in a good location for 500,000, making a $100,000 cash down payment and signing a 10-year mortgage note from a local bank for the rest. Borrowed $64,000 from the local bank on a 10 percent, one-year note. 1 Purchased food and paper supplies costing $13.000 in March; paid cash. Catered four parties in March for $5,600. S1.880 was billed and the rest was received in cash. 1. Sold food at the retail store for $17,600 cash, the food and paper supplies used cost $11,110. (Hint: Record the revenue effect separate from the expense effect) 1 Received a $560 telephone bill for March to be paid in April. L Paid $503 in gas for the van in March. i Paid $9,080 in wages to employees who worked in March. i Paid a $440 dividend from the corporation to each owner. Purchased S64,000 of equipment (refrigerated display cases, cabinets, tables, and chairs) and renovated and decorated the new store for $27,000 (added to the cost of the building): paid cash. Required:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:Lisa Frees and Amelia Ellinger have been operating a catering business for several years. In March,
the partners plan to expand by opening a retail sales shop. They have decided to form the business
as a corporation called Traveling Gourmet, Inc. The following tránsactions occurred in March:
a. Received $94,000 cash from each of the two shareholders to form the corporation, in addition to
$3,400 in accounts receivable, $8,100 in equipment, a van (equipment) appraised at a fair value of
$15,800, and $1,900 in supplies. Gave the two owners each 780 shares of common stock with a par
value of $1 per share.
b. Purchased a vacant store for sale in a good location for $500,000, making a $100,000 cash down
payment and signing a 10-year mortgage note from a local bank for the rest.
c. Borrowed $64,000 from the local bank on a 10 percent, one-year note.
d. Purchased food and paper supplies costing $13,000 in March; paid cash.
e. Catered four parties in March Tor $5,600: $1,880 was billed and the rest was received in cash.
1. Sold food at the retail store for $17,600 cash; the food and paper supplies used cost $11,110. (Hint:
Record the revenue effect separate from the expense effect.)
g. Received a $560 telephone bill for March to be paid in April.
h. Paid $503 in gas for the van in March.
i. Paid $9,080 in wages to employees who worked in March.
j. Paid a $440 dividend from the corporation to each owner.
K. Purchased $64,000 of equipment (refrigerated display cases, cabinets, tables, and chairs) and
renovated and decorated the new store for $27,000 (added to the cost of the building); paid cash.
Required:
2. Record in the T-accounts the effects of each transaction for Traveling Gourmet, Inc., in March.
Amount of Expense Incurred in
January
Expense Account Affected
2,757
a. Utilities expense
b. Advertising expense
c. Salaries expense
301
$4
193,750
d. None
e. None
53,360
f. Cost of goods sold
9. None
h. Commission expense
53,210
k.
I.
m.
n.
0.
P.
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