Question

Swifty Corporation was started on April 1 by R. S. Francis and associates. The following selected events and transactions occurred during April. Apr. 1 Stockholders invested $49,800 cash in the business in exchange for common stock. 4 Purchased land costing $30,500 for cash. 8 Incurred advertising expense of $1,510 on account. 11 Paid salaries to employees $1,380. 12 Hired park manager at a salary of $4,600 per month, effective May 1. 13 Paid $1,620 cash for a one-year insurance policy. 17 Declared and paid a $1,810 cash dividend. 20 Received $6,200 in cash for admission fees. 25 Sold 113 coupon books for $51 each. Each book contains 10 coupons that entitle the holder to one admission to the park. 30 Received $9,000 in cash admission fees. 30 Paid $530 on balance owed for advertising incurred on April 8. Swifty uses the following accounts: Cash, Prepaid Insurance, Land, Accounts Payable, Unearned Service Revenue, Common Stock, Dividends, Service Revenue, Advertising Expense, and Salaries and Wages Expense.Required:Journalize the April transactions.

Answer 1

Answer:

Swifty Corporation

Journal Entries:

April 1:

Debit Cash Account $49,800

Credit Common Stock $49,800

To record the issue of common stock for cash.

April 4:

Debit Land $30,500

Credit Cash Account $30,500

To record the purchase of land for cash.

April 8:

Debit Advertising Expense $1,510

Credit Accounts Payable $1,510

To record advertising expense incurred on account.

April 11:

Debit Salaries and Wages Expense $1,380

Credit Cash Account $1,380

To record the payment of salaries to employees.

April 13:

Debit Prepaid Insurance $1,620

Credit Cash Account $1,620

To record the prepayment of Insurance for one year.

April 17:

Debit Dividends $1,810

Credit Cash Account $1,810

To record the declaration any payment of dividend.

April 20:

Debit Cash Account $6,200

Credit Service Revenue $6,200

To record the receipt of admission fees in cash.

April 25:

Debit Cash Account $5,763

Credit Unearned Service Revenue $5,763

To record the receipt of admission fees in advance.

April 30:

Debit Cash Account $9,000

Credit Service Revenue $9,000

To record the receipt of admission fees in cash.

April 30:

Debit Accounts Payable $1,510

Credit Cash Account $1,510

To record the payment of advertising on account.

Explanation:

Swifty Corporation uses journals to initially record its business transactions as they occur on a daily basis.  Journalizing transactions is an important step in the accounting process, as it identifies accounts involved and shows the accounts to be debited and the ones to be credited in the general ledger.