Question

The following transactions occurred during the month of June 2021 for the Stridewell Corporation. The company owns and operates a retail shoe store.

1. Issued 80,000 shares of common stock in exchange for $400,000 cash.
2. Purchased office equipment at a cost of $72,500. $29,000 was paid in cash and a note payable was signed for the balance owed.
3. Purchased inventory on account at a cost of $160,000. The company uses the perpetual inventory system.
4. Credit sales for the month totaled $272,000. The cost of the goods sold was $136,000.
5. Paid $3,500 in rent on the store building for the month of June.
6. Paid $1,920 to an insurance company for fire and liability insurance for a one-year period beginning June 1, 2021.
7. Paid $115,600 on account for the merchandise purchased in 3.
8. Collected $54,400 from customers on account.
9. Paid shareholders a cash dividend of $4,000.
10. Recorded depreciation expense of $1,450 for the month on the office equipment.
11. Recorded the amount of prepaid insurance that expired for the month.

Required:
Prepare journal entries to record each of the transactions and events listed above. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
  

Answer 1

Answer
	Explanation	Debit	Credit
1	Cash	$      400,000
	Common Stock		$      400,000
2	Office Equipment	$        72,500
	Cash		$        29,000
	Notes Payable		$        43,500
3	Inventory	$      160,000
	Accounts Payable		$      160,000
4	Accounts Receivable	$      272,000
	Sales Revenue		$      272,000
	Cost of goods sold	$      136,000
	Inventory		$      136,000
5	Rent Expense	$          3,500
	Cash		$          3,500
6	Prepaid Insurace	$          1,920
	Cash		$          1,920
7	Accounts Payable	$      115,600
	Cash		$      115,600
8	Cash	$        54,400
	Accounts Receivable		$        54,400
9	Dividends	$          4,000
	Cash		$          4,000
10	Depreciation Expense	$          1,450
	Accumulated Depreciation		$          1,450
11	Insurance Expense	$             160		1920/12
	Prepaid Insurance		$             160