Question

The following transactions occurred during March 2021 for the Wainwright Corporation. The company owns and operates a wholesale warehouse.
Issued 36,000 shares of non-par common stock in exchange for $360,000 in cash.
Purchased equipment at a cost of $52,000. $13,000 cash was paid and a notes payable to the seller was signed for the balance owed.
Purchased inventory on account at a cost of $110,000. The company uses the perpetual inventory system.
Credit sales for the month totaled $150,000. The cost of the goods sold was $90,000.
Paid $4,750 in rent on the warehouse building for the month of March.
Paid $6,250 to an insurance company for fire and liability insurance for a one-year period beginning April 1, 2021.
Paid $90,000 on account for the merchandise purchased in 3.
Collected $67,500 from customers on account.
Recorded depreciation expense of $1,300 for the month on the equipment.
Prepare journal entries to record each of the transactions listed above. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Answer and Explanation:

The Journal entries are prepared below:-

1. Cash Dr, $360,000

         To Common Stock capital $360,000

(Being issue of shares is recorded)

2. Equipment Dr, $52,000

       To Cash $13,000

       To Note payable $39,000

(Being equipment is recorded)

3. Inventory Dr, $110,000

       To Accounts payable $110,000

(Being inventory is recorded)

4. Accounts receivable Dr, $150,000

          To Sales revenue $150,000

(Being sales revenue is recorded)

Cost of goods sold Dr, $90,000

           To Inventory $90,000

(Being cost of goods sold is recorded)

5. Rent expenses $4,750

        To Cash $4,750

(Being rent expense is recorded)

6. Prepaid Insurance $6,250

         To Cash $6,250

(Being cash paid is recorded)

7. Accounts Payable Dr, $90,000

           To Cash $90,000

(Being cash paid is recorded)

8. Cash Dr, $67,500

          To Accounts receivable $67,500

(Being cash receipt is recorded)

9. Depreciation expenses Dr, $1,300

           To Accumulated depreciation $1,300

(Being depreciation expense is recorded)