Question

Singh Company started business on January 1, 2020. The following transactions occurred in 2020: 1. On January 1, the company issued 10,000 common shares for $250,000. 2. On January 2, the company borrowed $54,500 from the bank. 3. On January 3, the company purchased land and a building for a total of $200,000 cash. The land was recently appraised at a fair market value of $60,000. (Note: Because the building will be depreciated in the future and the land will not, these two assets should be recorded in separate accounts.) 4. Inventory costing $134,000 was purchased on account 5. Sales to customers totalled $235,000. Of these, $175,000 were sales on account 6. The cost of the inventory that was sold to customers in transaction 5 was $124,300. 7. Payments to suppliers on account totalled $116,000. 8. Collections from customers on account totalled $155,000. 9. Payments to employees for wages were $59,600. In addition, there was $2,300 of unpaid wages at year end. 10. The interest on the bank loan was recognized for the year. The interest rate on the loan was 6%. 11. The building was estimated to have a useful life of 30 years and a residual value of $20,000. The company uses the straight- line method of depreciation. 12. The company declared dividends of $7,400 on December 15, 2020, to be paid on January 15, 2021.

Answer 1

Journal entries

No	General Journal	Debit	Credit
1	Cash	250000
	Common Stock		250000
2	Cash	54500
	Bank loan		54500
3	Land	60000
	Building	140000
	Cash		200000
4	Inventory	134000
	Account payable		134000
5	Account receivable	175000
	Cash	60000
	Sales revenue		235000
6	Cost of goods sold	124300
	Inventory		124300
7	Account payable	116000
	Cash		116000
8	Cash	155000
	Account receivable		155000
9	wages expense (59600+2300)	61900
	Wages payable		59600
	Cash		2300
10	Interest expense (54500*6%)	3270
	Interest payable		3270
11	Depreciation expense (140000-20000/30)	4000
	Accumulated Dep-Building		4000
12	Cash dividend	7400
	Dividend payable		7400