Question

The following transactions occurred during March 2018 for the Wainwright Corporation. The company owns and operates a wholesale warehouse.

1. Issued 43,000 shares of common stock in exchange for $430,000 in cash.
2. Purchased equipment at a cost of $53,000. $16,500 cash was paid and a note payable was signed for the balance owed.
3. Purchased inventory on account at a cost of $104,000. The company uses the perpetual inventory system.
4. Credit sales for the month totaled $185,000. The cost of the goods sold was $83,000.
5. Paid $6,300 in rent on the warehouse building for the month of March.
6. Paid $7,300 to an insurance company for fire and liability insurance for a one-year period beginning April 1, 2018.
7. Paid $83,000 on account for the merchandise purchased in 3.
8. Collected $68,000 from customers on account.
9. Recorded depreciation expense of $2,300 for the month on the equipment.

Post the above transactions to the below T-accounts. Assume that the opening balances in each of the accounts is zero. Prepare a trial balance from the ending account balances.
  

Answer 1

Solution:

Cash		Common Stock
Beg. Bal.	$0	$16,500	(2)		Beg. Bal	$0	$430,000	(1)
(1)	$430,000	$6,300	(5)
(8)	$68,000	$7,300	(6)
		$83,000	(7)		End. Bal		$430,000
End. Bal	$384,900
Equipment		Notes Payable
Beg. Bal.	$0				Beg. Bal.		$0
(2)	$53,000						$36.500	(2)
End. Bal	$53,000				End. Bal		$36.500
Inventory		Accounts Payable
Beg. Bal.	$0	$83,000	(4)		Beg. Bal		$0
(3)	$104,000				(7)	$83,000	$104,000	(3)
End. Bal	$21,000				End. Bal		$21,000
Sales Revenue		Accounts Receivable
Beg. Bal.		$0			Beg. Bal	$0	$68,000	(8)
		$185,000	(4)		(4)	$185,000
End. Bal		$185,000			End. Bal	$117,000
Cost of Goods Sold		Rent Expense
Beg. Bal.					Beg. Bal	$0
(4)	$83,000				(5)	$6,300
End. Bal	$83,000				End. Bal	$6,300
Prepaid Insurance		Rent Expense
Beg. Bal.	$0				Beg. Bal	$0
(6)	$7,300				(5)	$6,300
End. Bal	$7,300				End. Bal	$6,300
Depreciation Expense		Accumulated Depreciation - Equipment
Beg. Bal.	$0				Beg. Bal		$0
(9)	$2,300						$2,300	(9)
End. Bal	$2,300				End. Bal		$2,300

	Debit	Credit
Cash	384,900
Account receivable	117000
Inventory	21000
Prepaid insurance	7300
Equipment	53000
Accumlated depreciation-equipment		2300
Account payable		21000
Notes payable		36500
Common Stock		430000
Sales revenue		185000
Cost of goods sold	83000
Rent expense	6300
Depreciation expense	2300
Total	674,800	674,800

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