Bowers accumulated information on upscale retail garden stores from a number of sources, talked to suppliers,...

 

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Bowers accumulated information on upscale retail garden stores from a number of sources, talked to suppliers, looked at potential locations, and established a banking relationship with the Campbell National Bank. She wanted to make sure that she had enough money to get the businessoff to a good start. Mary Jane had heard stories about many small businesses that failed because theywere undercapitalized. After careful study and analysis, Mary Jane made the following projections for the first yearof operations of the Garden Place, Inc.: 1. April 1, 2006-The business would be incorporated, and Mary Jane and John would invest $60,000 in the company in exchange for shares of common stock. 2. April 1, 2006-The Campbell National Bank would loan Garden Place, Inc., $32,000 to berepaid in equal principal payments over four years. The interest rate was 13%, and interestwas payable at the end of each year when the principal payment was made. 3. April 1, 2006-A pickup truck would be purchased for $12,000, of which $10,000 would be financed by the Campbell National Bank. The loan would be repaid over three years at therate of $336 per month for a total of $12,100. 4. April 1, 2006-Display equipment would be purchased for $6,000 cash 5. April 1, 2006-A Rototiller would be purchased for $400 cash. 6. April 1, 2006-A cash register would be purchased for $3,600 cash. 7. April 1, 2006-An inventory of plants, trees, and shrubs would be purchased for $60,000cash. 8. The following things were projected to occur between April 1, 2006, and March 31, 2007: Cash sales: Sales on account: $340,000 $60,000 9. Additional purchase of plants, trees, and shrubs: $200,000. Mary Jane planned to price all items to give her a 40% gross margin, which is to say that if an item cost $6, it would be sold for $10. 10. Advertising expenses would be a percentage of sales, or $20,000 for the year. 11. Mary Jane categorized a group of business expenses as ongoing. They were forecast as follows: Rent: $7,200 ($600 per month) Telephone: $1,200 ($100 per month) Utilities: $4,800 ($400 per month) Payroll: $112,000 ($40,000 for Mary Jane and $72,000 for three regular and four part- time employees) 12. Monthly payments of $336 would be made on the $10,000 truck loan. 13. A principal payment of $8,000 would be made on the $32,000 bank loan, along with interestof $4,160. Required: 1. Post this information to T-accounts. Bowers accumulated information on upscale retail garden stores from a number of sources, talked to suppliers, looked at potential locations, and established a banking relationship with the Campbell National Bank. She wanted to make sure that she had enough money to get the businessoff to a good start. Mary Jane had heard stories about many small businesses that failed because theywere undercapitalized. After careful study and analysis, Mary Jane made the following projections for the first yearof operations of the Garden Place, Inc.: 1. April 1, 2006-The business would be incorporated, and Mary Jane and John would invest $60,000 in the company in exchange for shares of common stock. 2. April 1, 2006-The Campbell National Bank would loan Garden Place, Inc., $32,000 to berepaid in equal principal payments over four years. The interest rate was 13%, and interestwas payable at the end of each year when the principal payment was made. 3. April 1, 2006-A pickup truck would be purchased for $12,000, of which $10,000 would be financed by the Campbell National Bank. The loan would be repaid over three years at therate of $336 per month for a total of $12,100. 4. April 1, 2006-Display equipment would be purchased for $6,000 cash 5. April 1, 2006-A Rototiller would be purchased for $400 cash. 6. April 1, 2006-A cash register would be purchased for $3,600 cash. 7. April 1, 2006-An inventory of plants, trees, and shrubs would be purchased for $60,000cash. 8. The following things were projected to occur between April 1, 2006, and March 31, 2007: Cash sales: Sales on account: $340,000 $60,000 9. Additional purchase of plants, trees, and shrubs: $200,000. Mary Jane planned to price all items to give her a 40% gross margin, which is to say that if an item cost $6, it would be sold for $10. 10. Advertising expenses would be a percentage of sales, or $20,000 for the year. 11. Mary Jane categorized a group of business expenses as ongoing. They were forecast as follows: Rent: $7,200 ($600 per month) Telephone: $1,200 ($100 per month) Utilities: $4,800 ($400 per month) Payroll: $112,000 ($40,000 for Mary Jane and $72,000 for three regular and four part- time employees) 12. Monthly payments of $336 would be made on the $10,000 truck loan. 13. A principal payment of $8,000 would be made on the $32,000 bank loan, along with interestof $4,160. Required: 1. Post this information to T-accounts.

Answer rating: 100% (QA)

Answer Here are the Taccount postings for the transactions described Cash Date Description Debit Cre... View the full answer