Problem
The Firm was organized by five investors at the beginning of the year. The following activities occurred during the year.
i. Received $35,000 cash from the investors; investors were issued 1,500 shares of common stock with a par value of $0.5 per share.
ii. Purchased equipment for use in the business at a cost of $25,000; $5,000 was paid in cash and the company signed a note for the balance.
iii. Lent $3,500 to one of the investors who signed a note due in six months. (i) Prepare the journal entries for each transaction. (ii) Create the T-account for cash. Assume that the beginning balance is zero. For each of the three transactions, record the effects of the transaction in the cash T-account. In addition, calculate the ending balance in the T-account.