Question

Chad Polovick organized a new company, CapUniverse Inc. The company operates a small store in an area mall and specializes in baseball-type caps with logos printed on them. Chad, who is never without a cap, believes that his target market is college students. You have been hired to record the transactions occurring in the first two weeks of operations: May 1 Issued 1,950 shares for $35 per share. May 1 Borrowed $49,500 from the bank to provide additional funding to begin operations. The note is due in two years with interest at 10 percent annually. May 1 Paid $2,150 for the current month's rent and another $2,150 for next month's rent. May 1 Paid $2,940 for a one-year fire insurance policy (recorded as a prepaid expense). May 3 Purchased furniture and fixtures for the store for $19,900 on account. The amount is due within 30 days. May 4 Purchased for $4,000 cash a supply of University of Waterloo, York University, and Saint Mary's University baseball caps to be sold online. May 5 Placed advertisements on Google for a total of $550 cash. May 9 Sold caps for a total of $690, half of which was charged on account. The cost of the caps sold was $345. May 10 Made full payment for the furniture and fixtures purchased on account on May 3. May 14 Received $290 from a customer on account. Required: Prepare a journal entry to record each of the transactions. (If no entry is required for a transaction/event, select "No journal entry required in the first account field.) View transaction list

Answer 1

Answer
Journal entry
Date	Account Titles and Explanations	Debit	Credit
May. 1	Cash	$      68,250
	To, Common Stock (1950 shares * $35 per share)		$      68,250
	(To record the issue of common stock for cash)
May. 1	Cash	$      49,500
	To, 10% Note Payable		$      49,500
	(To record the issue of 10% note for cash)
May. 1	Prepaid Rent	$        2,150
	To, Rent Expense	$        2,150
	To, Cash		$        4,300
	(To record the payment of rent for current and next month)
May. 1	Prepaid Insurance	$        2,940
	To, Cash		$        2,940
	(To record the prepayment of insurance for one year by cash)
May. 3	Furniture and Fixtures	$      19,900
	To, Accounts Payable		$      19,900
	(To record the purchase of furniture and fixtures on account)
May. 4	Inventory	$        4,000
	To, Cash		$        4,000
	(To record the purchase of baseball caps for sale)
May. 5	Advertising Expense	$           550
	To, Cash		$           550
	(To record the payment of advertising expense by cash)
May. 9	Cash ($690*1/2)	$           345
	Accounts Receivable ($690*1/2)	$           345
	To, Sales Revenue		$           690
	(To record the sale of caps half on cash and half on account)
May. 9	Cost of Goods Sold	$           345
	To, Merchandising Inventory		$           345
	(To record the cost of goods sold)
May. 10	Accounts Payable	$      19,900
	To, Cash		$      19,900
	(To record the payment for the furniture and fixtures purchased on account)
May. 14	Cash	$           290
	To, Accounts Receivable		$           290
	(To record the receipt of cash from a customer on account)