Answer:
Stridewell Corporation
Journal Entries:
Debit Cash $375,000
Credit Common Stock $375,000
To record issue of 75,000 shares of common stock.
Debit Office Equipment $68,750
Credit Cash Account $27,500
Credit Notes Payable $41,250
To record purchase of office equipment.
Debit Inventory $150,000
Credit Accounts Payable $150,000
To record purchase of inventory on account
Debit Accounts Receivable $255,000
Credit Sales Revenue $255,000
To record sales on account.
Debit Cost of Goods Sold $127,500
Credit Inventory $127,500
To record cost of goods under the perpetual inventory system.
Debit Rent Expense $3,250
Credit Cash Account $3,250
To record payment of rent for June.
Debit Prepaid Insurance $1,800
Credit Cash Account $1,800
To record payment for insurance.
Debit Accounts Payable $108,375
Credit Cash Account $108,375
To record payment on account.
Debit Cash Account $51,000
Credit Accounts Receivable $51,000
To record cash collection from customers.
Debit Dividends $3,750
Credit Cash Account $3,750
To record payment of cash dividend.
Debit Depreciation Expense $1,375
Credit Accumulated Depreciation $1,375
To record depreciation charge for the month.
Debit Insurance Expense $150
Credit Prepaid Insurance $150
To record expired insurance for the month.
Explanation:
a) Journal Entries show the accounts to be debited and credited in the general ledger. They are the first accounting records of business transactions and events.
b) Insurance Expense for June is equal to $1,800/12 = $150 per month. This amount is deducted from the Prepaid Insurance to reduce the balance.
