Question

Problem (Deck 3) Ryan Terlecki organized a new Internet company, Cap Universe, Inc. The company specializes in baseball-type caps with logos printed on them. Ryan, who is never without a cap, believes that his target market is college and high school students. You have been hired to record the transactions occurring in the first month of operations. a Issued 2,800 shares of $0.01 par value common stock to investors for cash at $28 per share. 6. Borrowed 502.000 from the bank to provide additional funding to begin operations, the note is due in two years. c. Paid $2.400 cash for rent of a warehouse: $1,200 for the current month's rent and another $1,200 for next month's rent. d. Paid $1.440 for a one-year fire insurance policy on the warehouse (recorded as a prepaid expense). e Purchased furniture and fixtures for the warehouse for $10,000. paying $3,000 cash and the rest on account. The amount is due within 30 days. 1. Purchased for $3,200 cash The University of Pennsylvania, Notre Dame. The University of Texas at Austin, The Ohio State University, and Michigan State University baseball caps as inventory to sell online, Placed advertisements on Google for a total of $300 cash; the ads were run immediately h Sold caps totaling $2,500, half of which was charged on account. The cost of the caps sold was $1,700. (Hint: Make two entries.) Made full payment for the furniture and fordures purchased on account in (e). J. Received $250 from a customer on account. Required: Prepare journal entries for each transaction. Note that transaction (h) will require two entries, one for revenue and one for the related expense. (If no entry is required for a transaction event, select "No joumal entry required" in the first account field.)

Answer 1

S.NO TITLES DEBITS CREDIT $ A $ 17,574 CASH (2.600.626) DR $foo COD TO COMMON STOCK (2.600 $ 0.01) To CNT-in Caritm. 1n excess of PAR - COMMON STOCK (Being 3.600 share issue o To INVESTORS POR CASH) CASH DR 5 To NOTES PAYALLE (BEING $52000 Borrowed from THE BANK To Be4IN OPERATION) RENT EXPENSE DR PKEPAID RENT DR TO CASH (BEING THERENT OF THIS MONTH AND ANOTHER MONTH IS PAIO) ܘ ܘܘܐܪ $ SILOOD c. $12.00 $1200 $2400 PREPAID EXCENSE DR $1440 TO CASH (BEING 14EAR FIRE INSURANCE ON THE WAREHOUSE IS PAID) $ 1440 $ 3900 FURNITURE AND FIXTURE DR $10,000 TO CASH TO ACCOUNTS PAYABLE CBEING THE FURNITURE AND FITURE IS PURCHASED) $LI OD

F INVENTORY DR $ 3200 TO CALM $ 3200 BEING BASE BALL CAPS PURCHASED AS INVENTORY TO SELL ONLINE) G ADVERTISING &xpense to tasH DR $ 300 TO CASH (BEING THE ADVERTISMENT EXPENSE ARE PAID) IS 300 $2500 ACCOUNTS RECEIVABLE SISO EASH CASH DR DR SR50 HO SALES REVENUE (BEING CAPS SOLD HALF of WHICH WAS CHARUED ON ACCOUNT) COST of GooD SOLD TO INVENTORY (Bainh THE CAPS SOLD) DR S1700 S 1700 1 DR s Gloo ACLOUNTS PAYABLE TO CASH (BEING THE PAYMENT OF FURNTURE AND FIXTURE IS PAIO) s bloo CASH TO ACCOUNT RECEIVABLE DR $ 250 S250 (BEING THE PAYMENT IS RECEIVED ON A COUNTS FROM THE CUSTOMER)