Question

The following transactions occurred during March 2021 for the Wainwright Corporation. The company owns and operates a wholesale Warehouse 1. Issued 40,000 shares of common stock in exchange for $400,000 in cash 2. Purchased equipment at a cost of $50,000 $15,000 cash was paid and a notes payable to the seller was signed for the balance owed 3. Purchased inventory on account at a cost of $98,000. The company uses the perpetual inventory system 4 Credit sales for the month totaled $170,000. The cost of the goods sold was $80,000 5. Pald $6.000 in rent on the warehouse building for the month of March 6. Paid $7,000 to an insurance company for fire and liability insurance for a one year period beginning April 1, 2021 7. Paid $80,000 on account for the merchandise purchased in 3. 8. Collected $65.000 from customers on account 9. Recorded depreciation expense of $2.000 for the month on the equipment Post the above transactions to the below T-accounts. Assume that the opening balances in each of the accounts is zero. Prepare a trial balance from the ending account balances

Answer 1

Cash Beg. Bal. $0 1 $ 400,000 8 $ 65,000 Accounts receivable Beg. Bal. So 4 $ 170,000 $ 65,000 $15,000 $ 6,000 $ 7,000 $ 80,000 End. Bal. $ 357,000 End. Bal. $ 105,000 Inventory Prepaid insurance so Beg. Bal. 3 Beg. Bal. 6 Sol $ 98,000 $80,000 $7,000 End. Bal. $ 18,000 End. Bal. $ 7,000 Beg. Bal. Equipment $0 $ 50,000 Accumulated depreciation Beg. Bal. $0 $ 2,000 End. Bal. $50,000 End. Bal. $ 2,000

Accounts payable Notes payable Beg. Bal. So Beg. Bal. $ 80,000 $98,000 $ 35,000 End. Bal. $ 18,000 End. Bal. $ 35,000 Beg. Bal. Common stock $0 $ 400,000 Beg. Bal. Sales revenue $0 $ 170,000 End. Bal. $ 400,000 End. Bal. $ 170,000 Beg. Bal. 4 Cost of goods sold $0 $ 80,000 Beg. Bal. 5 Rent expense $ 0 $6,000 End. Bal. $ 80,000 End. Bal. $6,000 Depreciation expense Beg. Bal. $2,000 End. Bal. $2,000

Credit Trial Balance Account Title Debit Cash 357,000 Accounts receivable 105,000 Inventory 18,000 Prepaid insurance 7,000 Equipment 50,000 Accumulated depreciation Accounts payable Notes payable Common stock Sales revenue Cost of goods sold 80,000 Rent expense 6,000 Depreciation expense 2,000 Totals 625,000 2,000 18,000 35,000 400,000 170,000 625,000