In: Accounting
Harry and Ron formed Granger Company on January 1, 2013. Each contributed $200,000 in exchange for 10,000 shares of Common Stock with a par value of $1. The following are transactions for the month of January, the first month of operations.
Company acquired 400 acres of land in South Dakota at a cost of $500 per acre, paying in full.
Company established a line of credit with Dakota National Bank in the amount of $500,000 using the land as collateral.
Purchased supplies for $3,500 cash
Paid for January’s equipment rental, cash $50,000.
Sold timber from the land for $75,000.
Signed a 1 year lease on a 2,000 sq. ft. office, paying $2,800 for the month.
Sold large rocks to a landscaping customer, receiving half of the $15,000 in cash.
Paid $3,000 for fuel and oil used in the equipment.
Sold excess topsoil to a developer, 20 dump truck loads at $100 per load, cash.
Paid employees for the month, $12,000.
ABC Sign Company installed no trespassing signs and company signage at a cost of $1,500.
Received and paid invoice for insurance premiums for months of January-March, $15,000
Received invoice for 2,300 for fuel and oil used in the equipment.
On the last day of the month purchased 2 pickup trucks from a local dealer for $25,000 each, Dakota National Bank provided the loan with a rate of 2.49%, 12 months.
Signed contract to purchase an additional 250 acres of land at a cost of $600 per acre.
Accounts Listing:
Cash Accounts Receivable Prepaid Insurance Trucks
Land Accounts Payable Line of Credit Payable Note Payable
Common Stock Additional Paid in Capital Revenue Advertising Exp
Supplies Exp Equipment Rental Exp Office Lease Exp Fuel/Oil Exp
Insurance Exp Wages Exp
Requirements:
Provide a journal entry for each transaction or state “no journal entry required”
1 | Journal entries | ||
Date | Particulars | Debit-$ | Credit-$ |
2013 | |||
January | Debit Cash | 400000 | |
Credit common stock | 20000 | ||
Credit Additional paid in Capital | 380000 | ||
(Being contribution of $ 200,000 each by Harry and Ron in exchange of 10,000 shares each @ $ 1 per share. Total capital contribution is $ 200,000+$200,000= $ 400,000 , of which common stock is 20,000 shares x $ 1 = $ 20,000 and balance is additional paid in capital.) | |||
" | Debit Land | 200000 | |
Credit Cash | 200000 | ||
(Being purchase of 400 acres of land at a cost of $ 500 per acre by paying cash) | |||
" | No entry is required for establishing a line of credit with Dakota National Bank by using land as a collatral security | ||
" | Debit Supplies Expenses | 3500 | |
Credit Cash | 3500 | ||
(Being purchase of supplies by cash) | |||
" | Debit Equipment Rental Expenses | 50000 | |
Credit Cash | 50000 | ||
(Being paid the euipment rental for the month of January) | |||
" | Debit Cash | 75000 | |
Credit Revenue | 75000 | ||
(Being timber sold for $ 75000 from the land) | |||
" | No journal entries are required for signing a lease agreement of 2000 sq for space. The entry shall be passed once the rent become due. | ||
" | Debit Accounts Receivable | 7500 | |
Debit Cash | 7500 | ||
Credit Revenue | 15000 | ||
(Being large rocks sold to the customer for $ 15000,of which $ 7500 has been received by cash and balnce is receivable ) | |||
" | Debit Fuel/Oil Expenses | 3000 | |
Credit Cash | 3000 | ||
(Being cash paid for fuel and oil for equipment) | |||
" | Debit Cash | 2000 | |
Crdit Revenue | 2000 | ||
(Being 20 loads of topsoil sold at $ 100 per load to the developer ) | |||
" | Debit Wages Expenses | 12000 | |
Credit Cash | 12000 | ||
(Being wages paid the employees for the month ) | |||
" | Debit Advertising Expenses | 1500 | |
Credit Accounts Payable | 1500 | ||
(Being company installed no trespassing sign board and the cost of $ 1500 is payable to ABC company) | |||
" | Debit Insurance Expenses | 5000 | |
Debit Prepaid Insurance | 10000 | ||
Crdit Cash | 15000 | ||
(Being insurance premuim paid $ 15000 for the period Jan-Mar, ie $ 5000 per month. Of which premuim for the month of Jan becomes due.) | |||
" | Debit Fuel/Oil Expenses | 2300 | |
Credit Accounts Payable | 2300 | ||
(Being invoice received for fuel and oil used for equipment.) | |||
" | Debit Truck | 50000 | |
Credit Line of credit payable | 50000 | ||
(Being purchases of 2 pick up truck for $ 25,000 each by using loan provided by Dakota National Bank with a rate of 2.49% for 12 months.) | |||
" | No jounal entries are required for entering a contract to purchase an additional 250 acres of land at a cost of $ 600 per acre. |