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 50,000 shares of common stock in exchange for $250,000 cash. 2. Purchased office equipment at a cost of $50,000. $20,000 was paid in cash and a note payable was signed for the balance owed. 3. Purchased inventory on account at a cost of $100,000. The company uses the perpetual inventory system. 4. Credit sales for the month totaled $170,000. The cost of the goods sold was $85,000. 5. Paid $2,000 in rent on the store building for the month of June. 6. Paid $1,200 to an insurance company for fire and liability insurance for a one-year period beginning June 1, 2021. 7. Paid $72,250 on account for the merchandise purchased in 3. 8. Collected $34,000 from customers on account. 9. Paid shareholders a cash dividend of $2,500. 10. Recorded depreciation expense of $1,000 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.) View transaction list Journal entry worksheet < 1 2 3 4 5 6 7 8 12 > Issued 50,000 shares of common stock in exchange for $250,000 cash. Note: Enter debits before credits. Transaction General Journal Debit Credit 01

Answer 1

Transaction	Account Titles and Explanations	Debit	Credit
1	Cash	250,000
	Common stock		250,000
2	Office equipment	50,000
	Cash		20,000
	Note payable		30,000
3	Merchandise inventory	100,000
	Accounts payable		100,000
4	Accounts receivable	170,000
	Sales revenue		170,000
	Cost of goods sold	85,000
	Merchandise inventory		85,000
5	Rent expense	2,000
	Cash		2,000
6	Prepaid insurance	1,200
	Cash		1,200
7	Accounts payable	72,250
	Cash		72,250
8	Cash	34,000
	Accounts receivable		34,000
9	Dividends	2,500
	Cash		2,500
10	Depreciation expense	1,000
	Accumulated depreciation - Equipment		1,000
11	Insurance expense ($1,200/12*1)	100
	Prepaid insurance		100

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