Question

Exercise 4-7 (Static) Write Journal entries LO 6 The transactions relating to the formation of Blue Co. Stores Inc., and its first month of operations follow, a. The firm was organized and the stockholders invested cash of $16,000. b. The firm borrowed $10,000 from the bank: a short-term note was signed. c. Display cases and other store equipment costing $3.500 were purchased for cash. The original list price of the equipment was $3,800, but a discount was received because the seller was having a sale. d. A store location was rented, and $2,800 was paid for the first month's rent e. Inventory of $30,000 was purchased: $18,000 cash was paid to the suppliers, and the balance will be paid within 30 days. t. During the first week of operations, merchandise that had cost $8.000 was sold for $13,000 cash. g. A newspaper ad costing $200 was arranged for, it ran during the second week of the store's operations. The ad will be paid for in the next month. h. Additional inventory costing $8,400 was purchased cash of $2.400 was paid, and the balance is due in 30 days. 1. In the last three weeks of the first month, sales totaled $27,000 of which $19.200 was sold on account. The cost of the goods sold totaled $18.000 J. Employee wages for the month totaled $3.700; these will be paid during the first week of the next month. k. The firm collected a total of $6.320 from the sales on account recorded in transaction L 1. The firm paid a total of $9.440 of the amount owed to suppliers from transactione Required: Prepare the journal entries for each of these transactions, (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 14 4 5 6 7 The firm was organized and the stockholders invested cash of $16.000

Answer 1

Journal Entries
Transaction	General Journal	Debit	Credit
a)	Cash	$16,000
	Common Stock		$16,000
	(To record the cash invested in the business)
b)	Cash	$10,000
	Notes Payable		$10,000
	(To record the issue of note payable)
c)	Equipment	$3,500
	Cash		$3,500
	(To record the purchase of equipment by cash)
d)	Rent Expense	$2,800
	Cash		$2,800
	(To record the payment of rent expense by cash)
e)	Inventory	$30,000
	Cash		$18,000
	Accounts Payable ($30,000 - $18,000)		$12,000
	(To record the purchase of inventory by cash and on account)
f)	Cash	$13,000
	Sales Revenue		$13,000
	(To record the cash sales)
	Cost of goods sold	$8,000
	Inventory		$8,000
	(To record the cost of goods sold)
g)	Advertising Expense	$200
	Accounts Payable		$200
	(To record the advertising expense incurred on account)
h)	Inventory	$8,400
	Cash		$2,400
	Accounts Payable ($8,400 - $2,400)		$6,000
	(To record the purchase of inventory by cash and on account)
i)	Cash ($27,000 - $19,200)	$7,800
	Accounts Receivable	$19,200
	Sales Revenue		$27,000
	(To record the sales made on account and on cash)
	Cost of goods sold	$18,000
	Inventory		$18,000
	(To record the cost of goods sold)
j)	Salaries and Wages Expense	$3,700
	Salaries and Wages Payable		$3,700
	(To record the accrual of salaries and wages expenses)
k)	Cash	$6,320
	Accounts Receivable		$6,320
	(To record the collection of accounts receivable)
l)	Accounts Payable	$9,440
	Cash		$9,440
	(To record the payment of accounts payable)