Question

Required: Prepare journal entries for each of the following transactions:

1. Issued common stock for $3,000 cash

2. Purchased $2,000 of equipment on credit

3. Paid $400 cash for this month’s rent

4. Purchased on credit $4,000 of supplies to be used next month

5. Billed $2,500 to customers for repairs made to date

6. Paid cash for one‐half of the amount owing in transaction 4

7. Collected $500 of the amount billed in transaction 5

8. Sold one‐half of the equipment purchased in transaction 2 above for $1,000 in cash

Answer 1

Ans:

Date	Account Name
January		Debit	Credit
1	Cash	$3000
	Common Stock		$3000
	(To record share capital issued for cash)
2	Equipment	$2000
	Accounts Payable		$2000
	( To record good purchased for credit)
3	Rent Expense	$400
	Cash		$400
	(To record rent paid)
4	Supplies	$4000
	Accounts Payable		$4000
	(To record goods purchased on credit)
5	Accounts Receivable	$2500
	Service Revenue		$2500
	(To record Repair Services billed)
6	Accounts Payable	$2000
	Cash (4000/2)		$2000
	(To record cash dues paid)
7	Cash	$500
	Accounts receivable		$500
	(To record cash received)
8	Cash	$1000
	Equipment (2000/2)		$1000
	(To record equipment sold)