Question

Post the journal entries prepared in E 2-2 to T-accounts. Assume that the opening warances m Can Use CCUUMIS is zero. Prepare a trial balance from the ending account balances. is zero. Prepa E 2-3 T-accounts and trial balance • L02-3 E 2-4 Journal entries • LO2-2 The following transactions occurred during the month of June 2018 for the Stridewell Corporation. The company owns and operates a retail shoe store. 1. Issued 100,000 shares of common stock in exchange for $500,000 cash. 2. Purchased office equipment at a cost of $100,000. $40,000 was paid in cash and a note payable was signed for the balance owed. 3. Purchased inventory on account at a cost of $200,000. The company uses the perpetual inventory system. 4. Credit sales for the month totaled $280,000. The cost of the goods sold was $140,000. 5. Paid $6,000 in rent on the store building for the month of June. 6. Paid $3,000 to an insurance company for fire and liability insurance for a one-year period beginning June 1, 2018. 7. Paid $120,000 on account for the merchandise purchased in 3. 8. Collected $55,000 from customers on account. 9. Paid shareholders a cash dividend of $5,000. 10. Recorded depreciation expense of $2,000 for the month on the office equipment. 11. Recorded the amount of prepaid insurance that expired for the month. Required: Prepare journal entries to record each of the transactions and events listed above.

e 2-4 jourbal entries

Answer 1

Solution:

E2-4 journal entries:

No.of Event	Date	Account Title and Explanation	Debit ($)	Credit ($)
1.)		Cash	500,000
		Common stock		500,000
		(To record issued 10,000 shares)
2.)		Equipment	100,000
		Cash		40,000
		Notes payable		60,000
		(To record purchased of office equipment)
3.)		Inventory	200,000
		Accounts payable		200,000
		(To record purchased inventory)
4.)		Accounts Receivable	280,000
		Sales Revenue		280,000
		(To record credit sales for the month)
		Cost of goods sold	140,000
		Inventory		140,000
		(To record cost of goods sold)
5.)		Rent expenses	6,000
		Cash		6,000
		(To record rent on the store building)
6.)		Prepaid insurance	3,000
		Cash		3,000
		(To record an insurance company for fire and liability)
7.)		Account payable	120,000
		Cash		120,000
		(To record for the merchandise purchased in 3.)
8.)		Cash	55,000
		Account receivable		55,000
		(To record collected from customer)
9.)		Dividends	5,000
		Cash		5,000
		(To record paid shareholders)
10.)		Depreciation expenses	2,000
		Accumulated depreciation		2,000
		(To record depreciation expenses)
11.)		Insurance expenses ($3,000/12)	250
		Prepaid insurance		250
		(To record the amount of prepaid insurance)