Question

Assume Down, Inc., was organized on May 1 to compete with Despair, Inc.—a company that sells de-motivational posters and office products. Down, Inc., encountered the following events during its first month of operations.

1. Received $43,000 cash from the investors who organized Down, Inc.
2. Borrowed $16,000 cash and signed a note due in two years.
3. Ordered equipment costing $25,000.
4. Purchased $7,000 in equipment, paying $3,000 in cash and signing a six-month note for the balance.
5. Received the equipment ordered in (c), paid for half of it, and put the rest on account.

2. Prepare journal entries for each transaction. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Answer 1

Answer :

	In The Books Of Down Inc.
	In The Month Of May
S.No	Particular's		Debit	Credit
1	cash	Dr.	43000
	To investors	Cr.		43000
	(Being Cash Recived From Investors)
2	Cash	Dr.	16000
	To borrower	Cr.		16000
	(Being borrow money in cash)
3	No Entry
	(Because Ordered Equipment)
4	Equipment	Dr.	3000
	To Cash	Cr.		3000
	(Being equipment purchase and cash paid)
5	Equipment	Dr.	25000
	To Cash	Cr.		12500
	To Creditor	Cr.		12500
	(Being Half Amount Paid And Balance Amount in party Account)