Question

73 Chapter 3 Problems Problem 3.1 Prepare journal entries for the following independent transactions: a) Issued common stock in exchange for $500,000. b) Paid monthly office rent for the past month at the end of the month of $15,000. c) Purchased a building for $2,500,000, paying $1,000,000 cash and signing a note payable for the balance. d) Purchased office supplies for $3,000 on account. e) Used office supplies that had previously cost $2,000. f) Declared a cash dividend of $15,000, payable next month. g) Paid a previously declared cash dividend of $20,000. h) Billed clients $50,000 for services performed. i) Paid and recorded salaries for a month of $22,000 j) Collected $25,000 on account from clients. k) Paid $20,000 on account to suppliers.

Answer 1

Journal entry

No	General journal	debit	Credit
a	cash	500000
	Common Stock		500000
b	Rent expense	15000
	Cash		15000
c	Building	2500000
	Cash		1000000
	Notes payable		1500000
d	Office supplies	3000
	Account payable		3000
e	Supplies expense	2000
	Supplies		2000
f	Cash dividend	15000
	Dividend payable		15000
g	Dividend payable	20000
	Cash		20000
h	Account receivable	50000
	Service revenue		50000
i)	Salaries expense	22000
	Cash		22000
j)	Cash	25000
	Account receivable		25000
k	Account payable	20000
	cash		20000