Question

The following is a list of Company transactions for the month of May.

Required:

a. Prepare journal entries for each of these transactions. (You may omit explanations)

b. Identify the element or elements associated with each journal entry.

May 1 The Company sells $25,000 of inventory to customer for $40,000, of which $20,000 is collected in cash and the rest is billed to the customer.

May 3 The Company pays salaries of $4,500 that had previously been accrued at the end of April.

May 12 The Company's Board of Directors declares a dividend of $5,000 to be paid in 2 months.

May 25 The Company buys a computer on account for $3,500

May 31 The market value of the Company's investment in the bonds of XYZ Corporation, classified as available for sale, increased by $10,000

Answer 1

Solution:
	Journal Entries
	Transaction	Date	Accounts	Debit	Credit
	1	May.01	Cash	$                    20,000
			Account Receivable	$                    25,000
			Sales Revenue		$                      45,000
	2	May.01	Cost of Goods Sold	$                    25,000
			Inventory		$                      25,000
	3	May.03	Salary Payable	$                       4,500
			Cash		$                        4,500
	4	May.12	Retained Earnings	$                       5,000
			Dividend Payable		$                        5,000
	5	May. 25	Computer	$                       3,500
			Account Payable		$                        3,500
	6	May. 31	Investment - Available for Sale	$                    10,000
			Gain on Available for Sale Securities		$                      10,000