ACCT 3311 Chapter 3: Accounting Cycle Illustration

Granary Co. began operating on January 1, 2015. Various shareholders invested in Granary by purchasing S150,000 of no-par common stock. Granary then immediately borrowed s100,000 on a five-year note with ten percent interest payable annually beginning on January 2016. On January 8, 2015 Granary purchased a building for s170,000 in cash. This property had a twenty-five-year anticipated life and no salvage value and was to be depreciated using the straight- line method. On February Granary rented part of the building to a group of local doctors for ss.000 per month. (By December 31.Granary had collected rent totaling $50,000) On February 4, 2015 Granary purchased S12,000 of inventory on credit. They paid for of the inventory on Feb 18 and the remaining balance on March 18 on April 1, 2015 they sold 25% of inventory for S6,000 on credit. They collected the receivable at the end of April. A cash dividend of S4.000 was distributed on lune 25. On November 30, 2015 they sold another 50% of the original inventory balance for S12,000 on credit. On December 15, they received $4,000 in cash for the inventory sale.

a. Prepare journal entries for all noted transactions. (Be sure to include any adjusting entries)

b. Post journal entries to specific accounts using T-accounts.

c. Summarize a account balances into a working trial balance.

d. Use the trial balance to create a set off financial statements. (IS, RE, BS)