Question: Gigi and Sue started Granny Apple Delicious Inc on January

Gigi and Sue started Granny Apple Delicious, Inc., on January 1, 2011, to sell their famous applesauce. The following transactions occurred during the year:
a. Gigi and Sue started the business by contributing $15,000 each in exchange for common stock on January 1.
b. Also on January 1, the company borrowed $20,000 from Local Bank at 5.5%. The loan was for one year.
c. The company purchased $10,000 worth of apples and other inventory for cash during the year.
d. The company grew and needed to rent a shop. It paid $27,000 for rent on the shop for 18 months, beginning July 1.
e. Granny Apple Delicious, Inc., sold $36,000 worth of applesauce for cash during the first fiscal year. Of the inventory purchased in item (c) only $1,000 remained at year end.
f. During the year, Granny Apple Delicious, Inc., paid $1,525 in operating expenses.

1. Post the preceding transactions to T-accounts to determine the balance of each account on December 31, 2011; include any adjusting transactions necessary.
2. Prepare the adjusted trial balance, the income statement, statement of changes in shareholders’ equity, balance sheet, and a statement of cash flows at year end.
3. Prepare the closing entries and the postclosing trial balance at year end.

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  • CreatedSeptember 01, 2014
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