Granary Co. began operating on January 1, 2015. Various shareholders invested in Granary by purchasing $150,000 of no-par common stock. Granary then immediately borrowed $100,000 on a five-year note with ten percent interest payable annually beginning on January 1, 2016. On January 8, 2015 Granary purchased a building for $170,000 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 1, Granary rented part of the building to a group of local doctors for $5,000 per month. (By December 31, Granary had collected rent totaling $50,000.) On February 4, 2015 Granary purchased $12,000 of inventory on credit. They paid for ½ of the inventory on Feb 18 and the remaining balance on March 18th. On April 1, 2015 they sold 25% of inventory for $6,000 on credit. They collected the receivable at the end of April. A cash dividend of $4,000 was distributed on June 25. On November 30, 2015 they sold another 50% of the original inventory balance for $12,000 on credit. On December 15, they received $4,000 in cash for the inventory sale.
1. Prepare journal entries for all noted transactions. (Be sure to include any adjusting entries.)
2. Post journal entries to specific accounts using T-accounts.
3. Summarize all account balances into a working trial balance.
4. Use the trial balance to create a set of financial statements. (IS, RE, BS)