Question

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

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

1. Received $74,000 total cash from the six investors; each investor was issued 8,800 shares of common stock with a par value of $0.20 per share.
2. Purchased equipment for use in the business at a cost of $22,000; 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 $160 per week for cleaning the corporate offices next year.
4. Received an additional contribution from investors who provided $3,400 in cash and land valued at $19,000 in exchange for 1,400 shares of stock in the company.
5. Lent $2,900 to one of the investors who signed a note due in six months.
6. Ted Granger borrowed $7,400 for personal use from a local bank, signing a one-year note.

E2-9 Part 1

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 preceding transactions, record the effects of the transaction in the appropriate T-accounts. Include good referencing for each T-account.

E2-9 Part 2

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

Answer 1