Granger Service Company Inc was organized by Ted Granger and five other investors. The following activities occurred during the year:
a: Received $63,000 cash from the investors; each was issued 1,400 shares of capital stock.
b. Purchased equipment for use in the business at a cost of $20,000; 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
d. Received an additional contribution from investors who provided $4,000 in cash and land valued at $13,00 in exchange for stock in the company.
e. Lent $2,500 to one of the investors who signed a note due in six months.
f. Ted Granger borrowed $10,000 for personal use from a local bank, signing a one year note.
Required:
1. Create T-accounts for the following accounts: Cash, Note Receivable, Equipment, Land, Note Payable, and Contributed Capital. Beginning balances are $0. For each of the preceding transactions record the effects of the transaction in the appropriate T-accounts. Include good referencing and totals for each T-account.
2. Using the balances in the T-accounts, fill in the following amounts for the accounting equation:
Assets$________ = Liabilities $_________ + Stockholders’ Equity $_____________
3. Explain your response to events (c) and (f)