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)
