Question

(Journal entries) For each of the following transactions, propose a journal entry, and also state how the transaction affected the fundamental accounting equation. Assume each one occurred May 1, 2015.

1. The company made a sale of $30,000 for cash.
2. In connection with the sale in part a, the company delivered inventory with a cost of $25,000 to the customer. (You need to record the reduction of inventory, and the cost of goods sold.)
3. The company bought a car for $25,000 in cash.
4. The company bought inventory from a supplier, for $30,000, on account. The company has 30 days to pay.
5. A customer who had bought inventory in the previous month pays his bill of $2,400.

Answer 1

Liabilties Stockholders' Equty Transaction Date a. May 1 Account Titles and Explanation Debit Credit Assets Cash $30,000 Sales revenue $30,000 b. May 1 $25,000 Cost of goods sold Inventory $25,000 c. May 1 $25,000 Vehicle Cash $25,000 d. May 1 $30,000 Inventory Accounts Payable $30,000 e. May 1 $2,400 Cash Accounts Receivable $2,400