Question

J.K. Builders was incorporated on July 1. Received $72,000 cash invested by owners and issued common stock. Bought an unused field from a local farmer by paying $62,000 cash. As a construction site for smaller projects, it is estimated to be worth $67,000 to J.K. Builders. A lumber supplier delivered lumber supplies to J.K. Builders for future use. The lumber supplies would have normally sold for $12,000, but the supplier gave J.K. Builders a 12 percent discount. J.K. Builders has not yet received the $10,560 bill from the supplier. Borrowed $27,000 from the bank with a plan to use the funds to build a small workshop in August. The loan must be repaid in two years. One of the owners sold $12,000 worth of his common stock to another shareholder for $13,000.
Prepare journal entries for the above transactions from the first month of business.

Answer 1

Answer:

J.K. Builders

General Journal

Cash $72,000 (debit)

Common Stock $72,000 (credit)

Cash Received in Exchange of Common Stock

Land $62,000 (debit)

Cash $62,000 (credit)

Cash Paid for the Purchase of Land

Supplies $10,560 (debit)

Accounts Payable $10,560 (credit)

Supplies Bought on Credit

Cash $27,000 (debit)

Loan Payable $27,000 (credit)

Cash Loan Received

Explanation:

See the Journal Entries and Narrations that i have prepared above.

Notes.

1. Trade discounts are note recorded in the entity`s records.

2. We only record transactions and events that originated from entity (The Dual Entity Concept) not amount shareholder.