Question

The following transactions occurred during March 2018 for the Wainwright Corporation. The company owns and operates a wholesale warehouse. 1. Issued 40,000 shares of common stock in exchange for $400,000 in cash. 2. Purchased equipment at a cost of $50,000. $15,000 cash was paid and a note payable was signed for the balance owed. 3. Purchased inventory on account at a cost of $98,000. The company uses the perpetual inventory system. 4. Credit sales for the month totaled $170,000. The cost of the goods sold was $80,000. 5. Paid $6,000 in rent on the warehouse building for the month of March. 6. Paid $7,000 to an insurance company for fire and liability insurance for a one-year period beginning April 1, 2018. 7. Paid $80,000 on account for the merchandise purchased in 3. 8. Collected $65,000 from customers on account. 9. Recorded depreciation expense of $2,000 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

Capital A/c

To balance c/d	400000	By Cash	400000
	400000		400000
		By balance b/d	400000

Cash A/c

To common stock	400000	By Equipment	15000
To Account Receivable	65000	By Rent	6000
		By Prepaid Insurance	7000
		By Account Payable	80000
		By Balance c/d	357000
	465000		465000
To balance b/d	357000

Equipment A/c

To cash	15000	By Depreciation	2000
To Notes Payable	35000	By balance c/d	48000
	50000		50000
To balance b/d	48000

Notes Payable A/c

To balance c/d	35000	By Equipment	35000
	35000		35000
		By balance b/d	35000

Purchase A/c

To Account Payable	98000	By balance c/d	98000
	98000		98000
To balance b/d	98000

Accounts Payable A/c

To Cash	80000	By Purchase	98000
To balance c/d	18000
	98000		98000
		By balance b/d	18000

Sales A/c

To balance c/d	170000	By Account Receivable	170000
	170000		170000
		By balance b/d	170000

Account Receivable A/c

To Sales	170000	By Cash	65000
		By Balance c/d	105000
	170000		170000
To balance b/d	105000

Rent A/c

To cash	6000	By Balance c/d	6000
	6000		6000
To balance b/d	6000

Depreciation A/c

To Equipment	2000	By Balance c/d	2000
	2000		2000
To balance b/d	2000

Prepaid Insurance A/c

To Cash	7000	By Balance c/d	7000
	7000		7000
To balance b/d	7000

Trial Balance as on 31 March 2018:-

S.No	Account Titles	Debit	Credit
	Cash A/c	357000
	Equipment A/c	48000
	Account Receivable A/c	105000
	Prepaid Insurance A/c	7000
	Purchase A/c	98000
	Rent A/c	6000
	Depreciation A/c	2000
	Capital A/c		400000
	Notes Payable A/c		35000
	Account Payable A/c		18000
	Sales A/c		170000
	Total	623000	623000