Question

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”

Answer 1

In the books of Granger Company
Journal

Date	Particulars	Debit in $	Credit in $
January	Cash	$ 400,000.00
	Common Stock		$    20,000.00
	(10000 + 10000) x $ 1
	Additional Paid in Capital		$ 380,000.00
	Land	$ 200,000.00
	Cash		$ 200,000.00
	(400 x $500)
	NO ENTRY
	(Entry will made when amount will be withdrawn)
	Supplies Exp	$      3,500.00
	Cash		$      3,500.00
	Equipment Rental Exp	$    50,000.00
	Cash		$    50,000.00
	Cash	$    75,000.00
	Revenue		$    75,000.00
	Office Lease Exp	$      2,800.00
	Cash		$      2,800.00
	Cash ($15000 / 2)	$      7,500.00
	Accounts Receivable	$      7,500.00
	Revenue		$    15,000.00
	Fuel/Oil Exp	$      3,000.00
	Cash		$      3,000.00
	Cash (20 x $100)	$      2,000.00
	Revenue		$      2,000.00
	Wages Exp	$    12,000.00
	Cash		$    12,000.00
	Advertising Exp	$      1,500.00
	Cash		$      1,500.00
	Insurance Exp  (1/3 of $15000)	$      5,000.00
	Prepaid Insurance  (2/3 of $15000)	$    10,000.00
	Cash		$    15,000.00
	Fuel/Oil Exp	$      2,300.00
	Accounts Payables		$      2,300.00
	Trucks	$    50,000.00
	Notes Payable ($25000 x 2)		$    50,000.00
	NO ENTRY
	(Land Purchase entry will pass when Purchase Invoice will generate)