Question

The following transactions occurred during March 2018 for the Wainwright Corporation.

Answer 1

Answer and Explanation:

The Journal entries are shown below:-

1. Cash Dr, $450,000

          To common stock $450,000

(Being issuance of common stock is recorded)

2. Equipment Dr, $55,000

        To cash $17,500

         To notes payable $37,500

(Being equipment purchased is recorded)

3. Merchandise inventory Dr, $108,000

              To accounts payable $108,000

(Being inventory is purchased on the account is recorded)

4. Accounts receivable Dr, $195,000

             To sales revenue $195,000

(Being credit sales is recorded)

5. Cost of goods sold Dr, $85,000

           To Merchandise inventory $85,000

(Being cost of goods sold is recorded)

6. Rent expense Dr, $6,500

         To cash $6,500

(Being cash paid is recorded)

7. Prepaid insurance Dr, $7,500

         To cash $7,500

(Being cash paid is recorded)

8. Accounts payable Dr, $85,000

            To cash $85,000

(Being cash paid is recorded)

9. Cash Dr, $70,000

           To accounts receivable $70,000

(Being cash paid is recorded)

10. Depreciation expense Dr, $2,500

                    To accumulated depreciation- equipment $2,500

(Being depreciation expense is recorded)