Question

11 1) CORPORATION RECEIVED CASH AND ISSUED COMMON STOCK IN THE 12 AMOUNT OF $500,000 14 2) CASH IN THE AMOUNT OF $40,000 WAS RECEIVED FOR SERVICES 15 THAT WILL BE PERFORMED IN FEBRUARY 173) RECORD ONE MONTH REVENUE EARNED FOR SERVICES 18 DEFERRED IN AN EARLIER MONTH 19 SEE EXISTING BALANCE IN THE T ACCOUNT) 21 4) SOLD WIDGETS ON ACCOUNT IN THE AMOUNT OF 22 $220,000. THE COST WAS 50% 24 S) SOLD WIDGETS FOR CASH IN THE AMOUNT OF $100,000 25 THE COST WAS SO% 26 27 G) PAID FEBRUARY RENT OF $5,000 IN JANUARY 29 7) PAIDJANUARY RENT OF $5.000 31 8) PAID CASH OF $10,000 FOR UTILITY EXPENSE 339) PAID CASH OF $50,000 FOR SALARY EXPENSE 35 10) AT JANUARY 31 EMPLOYEES EARNED $20,000 THAT 36 WILL NOT BE PAID UNTIL THE FEBRUARY 1 PAYROLL 38 11) THE DEPRECIATON EXPENSE NEEDS TO BE RECORDED 39 FOR THE $200,000 EQUIPMENT - ASSUME A FIVE YEAR LIFE (ONLY ONE MONTH DEPRECIATION) 41 ASSUME THE EQUIPMENT PURCHASE IN JANUARY 42 WAS MADE AT MONTH END-SO NOT DEEPREIATED) 40 YEAR 44 12) RECEIVED A $S75,000 PAYMENT ON ACCOUNT 45 13) RECORD INSURANCE EXPENSE FOR THE MONTH OF 47 JANUARY (SEE THE T ACCOUNT FOR THE EXISTING 48 BALANCE OF PREPAID EXPENSE) SO 14) RECORD ONE MONTH INTEREST EXPENSE ON THE NOTES PAYABLE (HINT BOTH CURRENT AND LONG TERM) THE INTEREST RATE IS 10% 54 15) PURCHASED $500,000 OF INVENTORY ON ACCOUNT 56 16) PAID CASH OF $350,000 TO VENDORS FOR INVENTORY 57 PREVIOUSLY PURCHASED ON ACCOUNT 59 17) RECORD INTEREST EARNED ON NOTE RECEIVABLE 60 FOR THE MONTH OF JANUARY, RATE S 86 61 SEE EXISTING T ACCOUNT BALANCE) 63 18) RECORD DIVIDENDS PAID IN THE AMOUNT OF $3,000 65 19) RECORD THE PURCHASE OF EQUIPMENT FOR $500,000 66 BY SIGNING A NOTE 67 ASSUME PURCHASE JAN 31-NO DEPRECIATION OR 68 INTEREST NECESSARY FOR THE MONTH)
---What are the journal entries to these business transactions?

Answer 1

The journal entries are given as below:

S.No.	Account Titles	Debit	Credit
1)	Cash	$500,000
	Common Stock		$500,000
2)	Cash	$40,000
	Unearned Revenue		$40,000
3)	Unearned Revenue (40,000-24,000)	$16,000
	Service Revenue		$16,000
4)	Accounts Receivable	$220,000
	Widget Sales		$220,000
	Cost of Goods Sold (220,000*50%)	$110,000
	Inventory		$110,000
5)	Cash	$100,000
	Widget Sales		$100,000
	Cost of Goods Sold (100,000*50%)	$50,000
	Inventory		$50,000
6)	Prepaid Expenses (Rent)	$5,000
	Cash		$5,000
7)	Rent Expense	$5,000
	Cash		$5,000
8)	Utility Expense	$10,000
	Cash		$10,000
9)	Salary Expense	$50,000
	Cash		$50,000
10)	Salary Expense	$20,000
	Salaries Payable		$20,000
11)	Depreciation Expense (200,000*1/5*1/12)	$3,333.33
	Accumulated Depreciation		$3,333.33
12)	Cash	$575,000
	Accounts Receivable		$575,000
13)	Insurance Expense (22,000*1/12)	$1,833.33
	Prepaid Expenses		$1,833.33
14)	Interest Expense [(150,000+50,000)*10%*1/12]	$1,666.67
	Interest Payable		$1,666.67
15)	Inventory	$500,000
	Accounts Payable		$500,000
16)	Accounts Payable	$350,000
	Cash		$350,000
17)	Interest Receivable (200,000*8%*1/12)	$1,333.33
	Interest Revenue		$1,333.33
18)	Dividends Payable	$3,000
	Cash		$3,000
19)	Equipment	$500,000
	Notes Payable		$500,000