FINANCIAL ACCOUNTING 9TH
16th Edition
ISBN: 9781308821672
Author: Libby
Publisher: MCG/CREATE
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 2, Problem 2.9E
Analyzing the Effects of Transactions In T-Accounts
Granger Service Company, Inc., was organized by Ted Granger and five other investors. The following activities occurred during the year:
- a. Received $70,000 cash from the investors: each was issued 8,400 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 $18,000; 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 $120 per week for cleaning the corporate offices next year.
- d. Received an additional contribution from investors who provided $3,000 in cash and land valued at $15,000 in exchange for 1,000 shares of stock in the company.
- e. Lent $2,500 to one of the investors, w ho signed a note due in six months.
- f. Ted Granger borrowed $7,000 for personal use from a local bank, signing a one-year note.
Required:
- 1. Create T-accounts for the following accounts: Cash. Notes Receivable. Equipment. Land. Notes Payable. Common Stock, and Additional Paid-in Capital. Beginning balances are $0. For each of the transactions (a) through (f), record the effects of the transaction in the appropriate T-accounts. Include good referencing and totals for each T-account.
- 2. Using the balances in the T-accounts, fill in the following amounts for the
accounting equation: Assets $_____ = Liabilities $_________ + Stockholders’ Equity $__________
- 3. Explain your response to events (c) and (f).
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Following are the transactions of JonesSpa Corporation, for the month of January.
a. Borrowed $30,000 from a local bank; the loan is due in 9 months.
b. Lent $10,000 to an affiliate; accepted a note due in one year.
c. Sold to investors 100 additional shares of stock with a par value of $0.10 per share and a market price of $5 per share;
received cash.
d. Purchased $15,000 of equipment, paying $5,000 cash and signing a note for the rest due in one year.
e. Declared $2,000 in cash dividends to stockholders, to be paid in February.
For each of the above transactions, indicate the accounts and amounts. A sample is provided.
Note: Enter decreases to an element of the balance sheet with a minus sign.
a. Cash
b. Notes receivable
b.
C.
C.
d.
d.
e.
e.
Assets
Accounts payable
Accounts receivable
Accrued liabilities payable
Additional paid-in-capital
30,000 = Notes payable
10,000 =
=
=
=
=
=
=
Liabilities
30,000 +
+
+
+
+
+
+
+
+
Stockholders' Equity
Following are the transactions of JonesSpa Corporation, for the month of January.
a. Borrowed $20,500 from a local bank; the loan is due in 9 months.
b. Lent $7,200 to an affiliate; accepted a note due in one year.
c. Sold to investors 60 additional shares of stock with a par value of $0.10 per share and a market price of $20 per share; received
cash.
d. Purchased $19,500 of equipment, paying $5,900 cash and signing a note for the rest due in one year.
e. Declared $3,900 in cash dividends to stockholders, to be paid in February.
For each of the above transactions, indicate the accounts and amounts. A sample is provided.
Note: Enter decreases to an element of the balance sheet with a minus sign.
a. Cash
b. Cash
b. Notes receivable
C.
Cash
C.
d. Equipment
d. Cash
e.
e.
Assets
20,500
= Notes payable
Liabilities
=Short-term investments
11
=
=
= Notes payable
= Dividends payable
20,500+
Stockholders' Equity
+ Common stock
+Additional paid-in-capital
+
+
+Retained earnings
-3,900
Following are the transactions of JonesSpa Corporation, for the month of January.
a Borrowed $30,000 from a local bank; the loan is due in 9 months.
b. Lent $10,000 to an affiliate; accepted a note due in one year.
c. Sold to investors 100 additional shares of stock with a par value of $0.10 per share and a market price of $5 per share; received
cash.
d. Purchased $15,000 of equipment, paying $5,000 cash and signing a note for the rest due in one year.
e. Declared $2,000 in cash dividends to stockholders, to be paid in February.
Prepare the journal entry to record each of the above transactions for the month of January,
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
View transaction list
Journal entry worksheet
Record the receipt of the bank loan of $30,000.
Note: Enter debits before credits
Transaction
5
Record entry
General Journal
Clear entry
Debit
Credit
View general journal
Chapter 2 Solutions
FINANCIAL ACCOUNTING 9TH
Ch. 2 - Prob. 1QCh. 2 - Define the following: a. Asset b. Current asset c....Ch. 2 - Explain what the following accounting terms mean:...Ch. 2 - Why are accounting assumptions necessary?Ch. 2 - For accounting purposes, what is an account?...Ch. 2 - What is the fundamental accounting model?Ch. 2 - Prob. 7QCh. 2 - Explain what debit and credit mean.Ch. 2 - Prob. 9QCh. 2 - Prob. 10Q
Ch. 2 - Prob. 11QCh. 2 - Prob. 12QCh. 2 - How is the current ratio computed and interpreted?Ch. 2 - Prob. 14QCh. 2 - Prob. 1MCQCh. 2 - Which of the following is not an asset? a....Ch. 2 - Total liabilities on a balance sheet at the end of...Ch. 2 - The dual effects concept can best be described as...Ch. 2 - The T-account is a tool commonly used for...Ch. 2 - Prob. 6MCQCh. 2 - The Cash T-account has a beginning balance of...Ch. 2 - Prob. 8MCQCh. 2 - At the end of a recent year, The Gap, Inc.,...Ch. 2 - Prob. 10MCQCh. 2 - Matching Definitions with Terms Match each...Ch. 2 - Matching Definitions with Terms Match each...Ch. 2 - Identifying Events as Accounting Transactions...Ch. 2 - Classifying Accounts on a Balance Sheet The...Ch. 2 - Determining Financial Statement Effects of Several...Ch. 2 - Prob. 2.6MECh. 2 - Prob. 2.7MECh. 2 - Prob. 2.8MECh. 2 - Prob. 2.9MECh. 2 - Prob. 2.10MECh. 2 - Prob. 2.11MECh. 2 - Computing and Interpreting the Current Ratio...Ch. 2 - Identifying Transactions as Investing or Financing...Ch. 2 - Matching Definitions with Terms Match each...Ch. 2 - Identifying Account Titles The following are...Ch. 2 - Classifying Accounts and Their Usual Balances As...Ch. 2 - Determining Financial Statement Effects of Several...Ch. 2 - Determining Financial Statement Effects of Several...Ch. 2 - Recording Investing and Financing Activities Refer...Ch. 2 - Prob. 2.7ECh. 2 - Recording Investing and Financing Activities...Ch. 2 - Analyzing the Effects of Transactions In...Ch. 2 - Analyzing the Effects of Transactions In...Ch. 2 - Prob. 2.11ECh. 2 - Inferring Investing and Financing Transactions and...Ch. 2 - Recording Journal Entries Nathanson Corporation...Ch. 2 - Prob. 2.14ECh. 2 - Analyzing the Effects of Transactions Using...Ch. 2 - Prob. 2.16ECh. 2 - Prob. 2.17ECh. 2 - Prob. 2.18ECh. 2 - Inferring Typical Investing and Financing...Ch. 2 - Prob. 2.20ECh. 2 - Identifying the Investing and Financing Activities...Ch. 2 - Prob. 2.22ECh. 2 - Identifying Accounts on a Classified Balance Sheet...Ch. 2 - Determining Financial Statement Effects of Various...Ch. 2 - Prob. 2.3PCh. 2 - Prob. 2.4PCh. 2 - Prob. 2.5PCh. 2 - Prob. 2.6PCh. 2 - Prob. 2.1APCh. 2 - Determining Financial Statement Effects of Various...Ch. 2 - Recording Transactions in T-Accounts, Preparing...Ch. 2 - Prob. 2.4APCh. 2 - Accounting for the Establishment of a New Business...Ch. 2 - Prob. 2.1CPCh. 2 - Prob. 2.2CPCh. 2 - Prob. 2.3CPCh. 2 - Prob. 2.4CPCh. 2 - Prob. 2.5CPCh. 2 - Prob. 2.6CPCh. 2 - Prob. 2.7CPCh. 2 - Prob. 2.8CP
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Park & Company was recently formed with a $6,400 investment in the company by stockholders in exchange for common stock. The company then borrowed $3,400 from a local bank, purchased $1,140 of supplies on account, and also purchased $6,400 of equipment by paying $2,140 in cash and signing a promissory note for the balance. Based on these transactions, the company's total assets are: Multiple Choice $9,800. $15,200. $12,800. $11,940.arrow_forwardGrady Service Company Inc. was organized by Chris Grady and five other investors. The following events occurred during the year: a. Received $68,400 cash from the investors; each was issued 1,520 shares. b. Purchased equipment for use in the business at a cost of $18,400; one-fourth was paid in cash, and the company signed a note for the balance, payable in six months. c. Signed an agreement with a cleaning service to pay it $320 per week for cleaning the corporate offices. d. Lent $3,700 to one of the investors, who signed a note due in six months. e. Issued shares to additional investors, who contributed $7,200 in cash and a lot of land valued at $16,200. f. Paid the amount of the note payable in (b). g. Conor Mulkeen borrowed $11,200 for personal use from a local bank and signed a note payable in one year. Required: 1. Prepare journal entries for each transaction. (If no entry is required for a transaction/event, select "No journal…arrow_forwardBennett Griffin and Chula Garza organized Cole Valley Book Store as a corporation; each contributed $71,600 cash to start the business and received 4,700 shares of common stock. The store completed its first year of operations on December 31, current year. On that date, the following financial items for the year were determined: December 31, current year, cash on hand and in the bank, $69,650; December 31, current year, amounts due from customers from sales of books, $39,500; unused portion of store and office equipment, $73,500: December 31, current year, amounts owed to publishers for books purchased, $12,600; one-year note payable to a local bank for $3,800. No dividends were declared or paid to the stockholders during the year. Required: 1. Complete the following balance sheet as of the end of the current year. Some information has been given below. 2. What was the amount of net income for the year? (Hint: Use the retained earnings equation (Beginning Retained Earnings + Net Income…arrow_forward
- Answer this question correctly and accurately.arrow_forwardBennett Griffin and Chula Garza organized Cole Valley Book Store as a corporation; each contributed $71,600 cash to start the business and received 5,800 shares of common stock. The store completed its first year of operations on December 31, current year. On that date, the following financial items for the year were determined: December 31, current year, cash on hand and in the bank, $70,150; December 31, current year, amounts due from customers from sales of books, $41,000; unused portion of store and office equipment, $78,000; December 31, current year, amounts owed to publishers for books purchased, $13,800; one-year note payable to a local bank for $3,200. No dividends were declared or paid to the stockholders during the year. Required: 1. Complete the following balance sheet as of the end of the current year. Some information has been given below. 2. What was the amount of net income for the year? (Hint: Use the retained earnings equation [Beginning Retained Earnings + Net Income…arrow_forwardPark & Company was recently formed with a $6,000 investment in the company by stockholders in exchange for common stock. The company then borrowed $3,000 from a local bank, purchased $1,100 of supplies on account, and also purchased $6,000 of equipment by paying $2,100 in cash and signing a promissory note for the balance. Based on these transactions, the company's total assets arearrow_forward
- The following information is available about the company. Provide a five-step way to record this information so that it can be used by managers: 1. Investment of the company's shareholders in the amount of 1000 monetary units to establish a company and deposit this amount in a current account in a bank. 2. Purchase of land for 1,500 currency units, half of which will be paid in cash and the rest next year. 3- Purchasing equipment in the amount of 140 monetary units in cash. 4. Buy 500 currency units (60% cash and 40% credit). 5. Receive a loan in the amount of 90 monetary units from the bank and deposit it in the current account.arrow_forwardCapital Financial Advisors Limited had the following transactions during January, its first month of operations: a Issued to Marvin Tycoon 9,000 shares of share capital in exchange for his investment of $45,000 cash. b Borrowed $30,000 from a bank and signed a note payable due in three months. c Purchased office furniture costing $19,750; paid $6,000 cash and charged the balance on account. d Paid $6,000 of the amount owed for office furniture. e Issued an additional 2,000 shares to an individual who invests $10,000 in the business. INSTRUCTIONS: Record the above transactions directly in the T accounts below. Identify each entry in a T account with the letter shown for the transaction.arrow_forwardThe following are the transactions of Spotlighter, Incorporated, for the month of January. a. Borrowed $3.990 from a local bank on a note due in six months. b. Received $4,680 cash from investors and issued common stock to them. C. Purchased $1,100 in equipment, paying $250 cash and promising the rest on a note due in one year. d. Paid $350 cash for supplies. e. Bought and received $750 of supplies on account. Required: Post the effects to the appropriate T-accounts and determine ending account balances. Show a beginning balance of zero.arrow_forward
- Can I please have an explanation on this? Thank you!arrow_forwardDeliberate Speed Corporation (DSC) was incorporated as a private company. The company's accounts included the following at June 30: Accounts Payable Building Cash Contributed Capital Equipment During the month of July, the company had the following transactions: a. Issued 4,000 shares for $400,000 cash. Transaction b. Borrowed $90,000 cash from a local bank, payable in two years. c. Bought a factory building for $182,000; paid $82,000 in cash and signed a three-year note for the balance. d. Paid cash for equipment that cost $200,000. e. Purchased supplies for $30,000 on account. a. b. Required: 1. Analyze transactions (a)-(e) to determine their effects on the accounting equation. (Enter any decreases to account balances with a minus sign.) C. $ 10,000 100,000 26,000 180,000 118,000 d. e. Land Notes Payable (long-term) Retained Earnings Supplies Cash Assets $ 200,000 2,000 259,000 7,000 400,000 Liabilities Shareholders' Equityarrow_forwardon An analysis of Forest Hills Corporation's Investment in Marketable Securities account disclosed the following: Debit entries $ 160,000 Credit entries 240,000 Forest Hill's income statement included a $40,000 gain on sale of marketable securities and $30,000 dividend income from marketable securities. All payments and proceeds relating to marketable securities transactions were in cash. The amount of cash paid by Forest Hills Corporation in for the purchase of marketable securities was: Select one: O a. $200,000 O b. $190,000 O c. $160,000 O d. $240.000arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
The ACCOUNTING EQUATION For BEGINNERS; Author: Accounting Stuff;https://www.youtube.com/watch?v=56xscQ4viWE;License: Standard Youtube License