Lisa Frees and Amelia Ellinger have been operating a catering business for several years. In...
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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: Received $87,000 cash from each of the two shareholders to form the corporation, in addition to $2,700 in accounts receivable, $6,700 in equipment, a van (equipment) appraised at a fair value of $14,400, and $1,550 in supplies. Gave the two owners each 640 shares of common stock with a par value of $1 per share. Purchased a vacant store for sale in a good location for $430,000, making a $86,000 cash down payment and signing a 10-year mortgage note from a local bank for the rest. Borrowed $57,000 from the local bank on a 10 percent, one-year note. Purchased food and paper supplies costing $11,600 in March; paid cash. Catered four parties in March for $4,900; $1,740 was billed and the rest was received in cash. Sold food at the retail store for $17,250 cash; the food and paper supplies used cost $10,970. (Hint: Record the revenue effect separate from the expense effect.) Received a $490 telephone bill for March to be paid in April. Paid $433 in gas for the van in March. Paid $7,680 in wages to employees who worked in March. Paid a $370 dividend from the corporation to each owner. Purchased $57,000 of equipment (refrigerated display cases, cabinets, tables, and chairs) and renovated and decorated the new store for $23,500 (added to the cost of the building); paid cash. Required: 2. Record in the T-accounts the effects of each transaction for Traveling Gourmet, Inc., in March.
