Question

M2-15 Identifying Transactions and Preparing Journal Entries [LO 2-3] At the beginning of August, Joel Henry founded Bookmart.com, which sells new and used books online. He is passionate about books but does not have a lot of accounting experience. The company purchased equipment for $4,900 cash. The equipment is expected to be used for 10 or more years. Joel’s business bought $7,900 worth of inventory from a publisher. The company will pay the publisher within 45–60 days. Joel’s friend Sam lent $4,900 to the business. Sam had Joel write a note promising that Bookmart.com would repay the $4,900 in four months. Because they are good friends, Sam is not going to charge Joel interest. The company paid $1,950 cash for books purchased on account earlier in the month. Bookmart.com repaid the $4,900 loan established in (c). Prepare journal entries for the above transactions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Answer is complete but not entirely correct Debit Credit General Journal Transaction 4,900 Cash 4,900 Inventory 7,900 2 Accounts Payable 7,900 Cash 4,900 Notes Payable (long-term) 4,900 Accounts Payable 1,950 4 Cash 1,950 Notes Payable (long-term) 4,900 Cash 4,900 Notes Payable (long-term)

Answer 1