Reference no: EM132679615

Question - Grace's Diner, Inc.

Instructions - Using the Chart of Accounts provided, record the transactions in the General Journal for the month March 31, 2020.

1. The company began operations in 2018.

2. For the purposes of this assignment, ignore the effects of income tax, property tax, sales tax, and payroll tax.

3. Straight-line depreciation method is used.

4. The food inventory on hand March 31, 2020 was $3,200.

5. The supplies on hand March 31, 2020 were $1,125.

6. The telephone bill for March 31, 2020 for $235 was received April 2020.

7. The utility bill for March 31, 2020 for $385 was received April 2020.

8. For the purposes of this assignment, consider the note payable for delivery van purchase to be a current liability.

9. The following are transactions that occurred in the previous accounting period:

a. Liz Burnes and her brother, James each invested $10,000 in a corporation they formed to operate Grace's Diner, Inc. Each were issued 1,000 shares of $10 par value common stock.

b. The corporation borrowed $30,000 as a small business loan from a local bank in 2018. The loan is an 'interest only' at a fixed rate of 8% per year. A balloon payment of the principal will be due in 5 years. The annual interest payment is due on the 31st of December.

c. The company rents a facility for $1,500 per month.

d. The business purchased equipment and fixtures for $26,000 in 2018. The assets have a useful life of 6 years with $2,000 residual value. The corporation took 1/2 year depreciation in year of purchase, 2018.

e. The company purchased a delivery van valued at $35,000 with a $10,000 down payment and a 3-year, $25,000 note payable with an annual interest rate of 6%. The van has a 5 year useful life.The corporation took 1/2 year depreciation in year of purchase, 2018. The monthly payment including principal and interest is $760.55.

f. Preston Hill, a local B & B, arranged with Grace's Diner to provide breakfast for their guests at $10 per person per day. Grace's Diner bills the B & B at the end of each month for the meals provided. Payment is required by the 10th of the next month.

Create a journal entry for: March 9, 2020 Received payment from Preston Ridge B & B for the month of February, 2020.