Answer:
Oct 1.
Debit Cash account $41,000
Credit Common stock $41,000
Being entries to record cash received for common stock
Oct 2.
No entries are required
Oct 3.
Debit Equipment account $4,400
Credit Accounts payable $4,400
Being entries to recognize asset purchased on account
Oct 6.
Debit accounts receivable $13,000
Credit Revenue account $13,000
Being entries to recognize commission yet to be received from Springer.
Oct 10.
Debit Cash account $170
Credit Revenue account $170
Being entries to recognize cash received for acting as rental agent
Oct 27.
Debit Accounts payable $880
Credit Cash account $880
Being entries to recognize cash paid for equipment purchased earlier
Oct 30. Since annual salaries is $30,000, monthly salaries
= $30,000/12
= $2,500
Debit Salaries expense $2,500
Credit Cash account $2,500
Being entries to recognized salary expense paid for October
Explanation:
When cash is received for common stock, cash increases and so does equity. when an employment is given to an employee, salary expense is not incurred until the employee has worked.
For equipment purchased on account, the purchase creates a liability in form of accounts payable while asset balance also increases.
Rental income and other forms of income (revenue in this case) must be recognized immediately it is earned and not necessarily when cash is paid.
