Question

For each of the following transactions, prepare journal entries:

a.		The company issued common shares for $157,000.
b.		The company borrowed $67,000 from a bank. (Use Bank Loan Payable)
c.		Inventory costing $46,400 was purchased on account.
d.		Rented a retail space and paid a damage deposit of $9,000.
e.		Received a bill for advertising costs of $3,600 related to the grand opening.
f.		Paid employees wages of $15,300.
g.		Inventory costing $42,200 was sold for $70,000, half for cash and half on account. (Hint: Two journal entries are required.)
h.		A payment of $43,500 was made on accounts payable.
i.		Accounts receivable totalling $20,900 were collected.
j.		New equipment costing $108,000 was purchased for cash.
k.		The company paid $17,200 on its bank loan, which included $10,000 of interest.
l.		The company paid $8,600 for the monthly rent on its retail location.
m.		The company’s board declared and paid dividends of $13,300.
n.		Paid the advertising bill related to the grand opening (see transaction (e)).

Answer 1

SL NO	PARTICULARS	DEBIT ($)	CREDIT ($)
a)	Bank Account.............. Dr Share Capital Account [Issued shares and the amount credited to share capital ]	157,000	157,000
b)	Bank Account.............. Dr Bank loan payable Account [ Amount borrowed from bank credited bank loan payable account ]	67,000	67,000
c)	Purchases Account.............. Dr Accounts Payable Account [ Purchases some inventory for credit ]	46,400	46,400
d)	Rent Deposit.............. Dr Bank Account [Paid Damage Deposit for rented space ]	9,000	9,000
e)	Advertisement Expense.............. Dr Advertisement Payable Account [ Received a bill for advertisement expense ]	3,600	3,600
f)	Wages.............. Dr Bank Account [ Wages paid to employees ]	15,300	15,300
g)	Cash account.............. Dr Sales Account [ Sold inventory for cash ] Accounts Receivable Account.............. Dr Sales Account [ Sold inventory for credit ]	35,000 35,000	35,000 35,000
h)	Accounts payable Account.............. Dr Bank Account [Amount paid to creditors ]	43,500	43,500
i)	Bank Account.............. Dr Accounts Receivable Account [Amount received from debtors ]	20,900	20900
j)	Equipment Account.............. Dr Cash Account [Purchased an asset for cash ]	108,000	108,000
k)	Bank loan payable account.............. Dr Bank Account [ Principal part of bank loan repaid ] Bank Interest.............. Dr Bank Account [Amount paid as Bank interest on loan availed]	7,200 10,000	7,200 10,000
l)	Rent Account.............. Dr Bank Account [ Amount Paid as monthly rent for rented space ]	8,600	8,600
m)	Reserves & Surplus Account.............. Dr Proposed Dividend Payable Account [Dividend declared by the board transferred from reserves & surplus to proposed dividend payable account ] Proposed Dividend Payable Account.............. Dr Bank Account [ Dividend declared paid out of Proposed Dividend Payable Account]	13,300 13,300	13,300 13,300
n)	Advertisement Payable Account.............. Dr Bank Account [Amount paid in relation to Advertisement bill raised in relation to grand opening ]	3,600	3,600