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 145,000 shares of common stock in exchange for $725,000 cash. 2. Purchased office equipment at a cost of $117,500. $47,000 was paid in cash and a note payable was signed for the balance owed. 3. Purchased inventory on account at a cost of $290,000. The company uses the perpetual inventory system. 4. Credit sales for the month totaled $493,000. The cost of the goods sold was $246,500. 5. Paid $6,750 in rent on the store building for the month of June. 6. Paid $3,480 to an insurance company for fire and liability insurance for a one-year period beginning June 1, 2021. 7. Paid $209,525 on account for the merchandise purchased in 3. 8. Collected $98,600 from customers on account. 9. Paid shareholders a cash dividend of $7,250. 10. Recorded depreciation expense of $2,350 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:

Journal entry

No	General Journal	Debit	Credit
1	Cash	725,000
	Common Stock		725,000
2	Office equipment	117,500
	Cash		47,000
	Notes payable		70,500
3	Inventory	290,000
	Account payable		290,000
4	Account receivable	493,000
	Sales revenue		493,000
	Cost of goods sold	246,500
	Inventory		246,500
5	Rent expense	6,750
	Cash		6,750
6	Prepaid insurance	3,480
	cash		3,480
7	Account payable	209,525
	Cash		209,525
8	Cash	98,600
	Account receivable		98,600
9	Cash dividend	7,250
	Cash		7,250
10	Depreciation expense	2,350
	Accumulated depreciation-equipment		2,350
11	Insurance expense	290
	Prepaid insurance (3480/12)		290