Question

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 transactions occurred in March: a. Received $96,000 cash from each of the two shareholders to form the corporation, in addition to $3,600 in accounts receivable, $8,500 in equipment, a van (equipment) appraised at a fair value of $16,200, and $2,000 in supplies. Gave the two owners each 820 shares of common stock with a par value of $1 per share. b. Purchased a vacant store for sale in a good location for $520,000, making a $104,000 cash down payment and signing a 10-year mortgage note from a local bank for the rest. c. Borrowed $66,000 from the local bank on a 10 percent, one-year note. d. Purchased food and paper supplies costing $13,400 in March; paid cash. e. Catered four parties in March for $5,800; $1,920 was billed and the rest was received in cash. f. Sold food at the retail store for $17,700 cash; the food and paper supplies used cost $11,150. (Hint: Record the revenue effect separate from the expense effect.) g. Received a $580 telephone bill for March to be paid in April. h. Paid $523 in gas for the van in March. i. Paid $9,480 in wages to employees who worked in March. j. Paid a $460 dividend from the corporation to each owner. k. Purchased $66,000 of equipment (refrigerated display cases, cabinets, tables, and chairs) and renovated and decorated the new store for $28,000 (added to the cost of the building); paid cash.

Answer 1

Cash					Accounts Receivable
Beg. Bal.	0				Beg. Bal.	0
a.	192000	104000	b.		a.	3600
c.	66000	13400	d.		e.	1920
e.	3880	523	h.
f.	17700	9480	i.		End. Bal.	5520
		920	j.
		94000	k.
End. Bal.	57257
Supplies					Equipment
Beg. Bal.	0				Beg. Bal.	0
a.	2000	11150	f.		a.	24700
d.	13400				k.	66000
End. Bal.	4250				End. Bal.	90700
Building					Accounts Payable
Beg. Bal.	0				Beg. Bal.		0
b.	520000						580	g.
k.	28000
End. Bal.	548000				End. Bal.		580
Note Payable					Mortgage Payable
Beg. Bal.		0			Beg. Bal.		0
		66000	c.				416000	b.
End. Bal.		66000			End. Bal.		416000
Common Stock					Additional Paid-in Capital
Beg. Bal.		0			Beg. Bal.		0
		1640	a.				220660	a.
End. Bal.		1640			End. Bal.		220660
Retained Earnings					Food Sales Revenue
Beg. Bal.	0				Beg. Bal.		0
j.	920						17700	f.
End. Bal.	920				End. Bal.		17700
Catering Sales Revenue					Supplies Expense
Beg. Bal.		0			Beg. Bal.	0
		5800	e.		f.	11150
End. Bal.		5800			End. Bal.	11150
Utilities Expense					Wages Expense
Beg. Bal.	0				Beg. Bal.	0
g.	580				i.	9480
End. Bal.	580				End. Bal.	9480
Fuel Expense
Beg. Bal.	0
h.	523
End. Bal.	523