Answer:
a. Issued 2,300 shares of $0.01 par value common stock to investors for cash at $23 per share.
Dr Cash (A) 52,900
Cr Common stock (SE) 23
Cr Additional paid in capital (SE) 52,877
b. Borrowed $61,000 from the bank to provide additional funding to begin operations; the note is due in two years.
Dr Cash (A) 61,000
Cr Notes payable (L) 61,000
c. Paid $2,200 cash for rent of a warehouse: $1,100 for the current month’s rent and another $1,100 for next month’s rent.
Dr Rent expense (E) 1,100
Dr Prepaid rent (A) 1,100
Cr Cash (A) 2,200
d. Paid $2,160 for a one-year fire insurance policy on the warehouse (recorded as a prepaid expense).
Dr Prepaid insurance (A) 2,160
Cr Cash (A) 2,160
e. Purchased furniture and fixtures for the warehouse for $20,000, paying $3,100 cash and the rest on account. The amount is due within 30 days.
Dr Furniture and fixtures (A) 20,000
Cr Cash (A) 3,100
Cr Accounts payable (L) 16,900
f. Purchased for $3,800 cash The University of Pennsylvania, Notre Dame, The University of Texas at Austin, The Ohio State University, and Michigan State University baseball caps as inventory to sell online.
Dr Merchandise inventory (A) 3,800
Cr Cash (A) 3,800
g. Placed advertisements on Google for a total of $330 cash; the ads were run immediately.
Dr Advertising expense (E) 330
Cr Cash (A) 330
h. Sold caps totaling $1,900, half of which was charged on account.
i. The cost of the caps sold was $1,100. (Hint: Make two entries.)
Dr Accounts receivable (A) 1,900
Cr Sales revenue (R) 1,900
Dr Cost of goods sold (E) 1,100
Cr Merchandise inventory (A) 1,100
j. Made full payment for the furniture and fixtures purchased on account in (e).
Dr Accounts payable (L) 16,900
Cr Cash (A) 16,900
k. Received $210 from a customer on account.
Dr Cash (A) 210
Cr Accounts receivable (A) 210
