Question

Selected transactions for Sunland Corporation during September 2018, its first month in business, are presented below: Sept. 1 Issued common shares in exchange for $20,000 cash. 2 Paid $1,500 cash for rent for the month of September. 5 Purchased equipment for $9,000, paying $2,100 in cash and the balance on account. 8 Earned $6.700 in revenue, receiving $1,000 cash and $5,700 on account of services provided. 12 Incurred $500 in advertising expense on account. 20 Paid $2,700 for repairs and maintenance expenses. 25 Paid $5,100 cash on balance owed for equipment. 27 Incurred and paid income taxes for the month amounting to $1,000. 30 Declared and paid a $400 cash dividend.

Answer 1

Date                        Account Title and Explanation                               Debit                     Credit

Sept 1.                  Cash A/c               Dr.                                                     $20,000

                                                To Common Shares A/c                                                            $20,000

                                (Being Shares issued for cash)

Sept 2.                  Rent A/c             Dr.                                                          $1500

                                             To Cash A/c                                                                                    $1500

                                (Being rent paid in cash)

Sept 5.                 Equipment A/c   Dr.                                                         $ 9000

                                                To Cash A/c                                                                              $2100

                                                To Accounts Payable A/c                                                               $6900

                                (Being Equipment purchased)

Sept 8.                  Cash A/c                                Dr.                                     $1000

                                Accounts Receivable A/c    Dr.                                     $5700

                                                To Service Revenue A/c                                                                 $6700

                                (Being Revenue Earned and received in part)

Sept 12.               Advertisement Expense A/c   Dr.   $500

                                                To Accounts Payable A/c                                                               $500

                                (Being advertisement expenses incurred and payable)

Sept 20.                Repairs & Maintenance Expense A/c Dr. $2700

                                                To Cash A/c                                                                                   $2700

                                (Being repairs and maintenance expenses paid )

Sept 25.                Accounts Payable A/c Dr.                                              $5100

                                                To Cash A/c                                                                                        $5100

                                (Being Equipment balance amount paid in cash)

Sept 27.                Income Tax A/c Dr.                                                          $1000

                                                To Cash A/c                                                                                         $1000

                                (Being Income tax paid in cash)

Sept 30.               Dividend Declared A/c Dr.                                            $400

                                                To Cash A/c                                                                                         $400

                                (Being dividend declared and paid)