Question

(21 pts) Journalize the following transactions from ABC's perspective: a. ABC issues $30,000 of common stock. b. ABC performs services valued at $20,000 to a customer. The customer pays $6,000 cash and asks ABC to put the balance on account. C. On July 1, ABC pays $12,000 for six months' insurance. d. ABC purchases $8,000 worth of inventory on account. e. The customer in (b.) sends $10,000 to ABC. f. ABC pays off the supplier in (d.) g. Record the AJE related to (c.) at the end of July.

Answer 1

a) Bank a/c Dr.   $30,000

To Share capital a/c $30,000

b) Cash a/c Dr. $6,000

Customer's a/c Dr. $14,000

To sales a/c $20,000

c) Prepaid Insurance a/c Dr. $ 12,000

To Bank a/c $ 12,000

d) Inventory a/c Dr. $8,000

To Supplier's a/c $8,000

e) Bank a/c Dr. $10,000

To customer's a/c $10,000

f) Supplier's a/c Dr. $8,000

To bank a/c $8,000

g) Insurance expense a/c Dr. $2,000 i.e [ ( $12,000 / 6)*1]

To Prepaid Insurance a/c $2,000 i.e [ ($12,000 / 6)*1]