Question

f. Purchased a flat-screen TV for Smith's home. g. Paid Smith a cash dividend of $4,000. h. Purchased office supplies on account for $1,200. i. Borrowed $62,000 from the bank for use in the business. j. Received $12,000 cash and issued stock to a stockholder.

Answer 1

Answer:

Seeing the problem we have, it's understood we have to pass journal entries.

Explanation:

                                                     In the books of Smith Ltd.

(f) Drawings A/C Dr.

                  To Purchases A/C

(TV purchased for Smith's personal use, assuming it as a credit purchase)

(g) Dividends payable A/C Dr.              $ 4,000

                   To Cash A/C                                                 $ 4,000                   

(Cash dividend paid to Smith)

(h) Purchases A/C Dr.                                     $ 1,200

                   To Creditor's A/C                                            $ 1,200

(Office supplies purchased on account i.e. on credit)

(i) Bank A/C Dr.                              $ 62,000

                   To Bank loan A/C                                    $ 62,000

(Bank borrowings made for use in the business)

(j)  Bank A/C Dr.                                 $ 12,000

                  To share application and allotment A/C    $ 12,000

(Shares issued to a stockholder)  

Total                                                  $ 79,200               $ 79,200