Question

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E2-9 (Algo) Analyzing the Effects of Transactions in T-Accounts LO2-4

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

1. Received $87,000 cash from the six investors; each investor was issued 10,100 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 $35,000; 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 $290 per week for cleaning the corporate offices next year.
4. Received an additional contribution from investors who provided $4,700 in cash and land valued at $32,000 in exchange for 2,700 shares of stock in the company.
5. Lent $4,200 to one of the investors, who signed a note due in six months.
6. Bennett Griffin borrowed $8,700 for personal use from a local bank, signing a one-year note.

E2-9 Part 1

Required:

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

E2-9 Part 2

2. Using the balances in the T-accounts, fill in the following amounts for the accounting equation:

Answer 1

EQUITY CREDIT | DATE DATE DATE DEBIT BEG.BAL EQUIPMENT DATE DEBIT CREDIT BEG.BAL 35,000.00 87,000.00 4,700.00 32,000.00 CL.BAL CL.BAL 35,000.00 35,000.00 ASSET = LIABILITY + EQUITY ASSETS $35000 $78750 $32000 $4200 LIABILITY $26250 EQUITY $123700 1,23,700.00 1,23,700.00 35,000.00 1,23,700.00 149950=149950 CREDITORS CREDIT DATE DEBIT BEG.BAL DATE DATE 26,250.00 CASH DATE DEBIT CREDIT BEG.BAL 87,000.00 8,750.00 4,700.00 4,200.00 CL.BAL 78,750.00 91,700.00 91,700.00 CL.BAL 26,250.00 26,250.00 26,250.00 DATE DATE LAND DATE DEBIT CREDIT BEG.BAL 32,000.00 RECEIVABLES DATE DEBIT CREDIT BEG.BAL 4,200.00 CL.BAL 32,000.00 32,000.00 CL.BAL 14,200.00 4,200.00 4,200.00 32,000.00