Question

Jameson Corporation was organized on May 1. The following events occurred during the first month. Received $68,000 cash from the five investors who organized Jameson Corporation. Each investor received 103 shares of $10 par value common stock. Ordered store fixtures costing $19,000. Borrowed $17,000 cash and signed a note due in two years. Purchased $18,000 of equipment, paying $1,500 in cash and signing a six-month note for the balance. Lent $1,600 to an employee who signed a note to repay the loan in three months. Received and paid for the store fixtures ordered in (b). Required: Prepare journal entries for each transaction. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Answer:

Explanation:

The journal entries are shown below:

1.  Cash A/c Dr $68,000

                  To Common stock                      $5,150

                   To Additional paid-in capital     $62,850

(Being the cash is received)

The common stock value is computed by

= Number of investors × number of shares × par value

= 5 investors  × 103 shares × $10

= $5,150

And, the remaining balance is transferred to additional paid-in capital

2. No journal entry required

3.  Cash A/c Dr $17,000

            To Long term note payable A/c $17,000

(being cash is borrowed for long term payable)

4.  Equipment A/c Dr $18,000

        To Cash A/c                         $1,500

        To Short term note payable $16,500

(Being equipment is purchased for cash and short term note payable)

5.  Short term Notes receivable A/c Dr $1,600

           To Cash                                                       $1,600

(Being cash is paid)

6. Store fixtures A/c Dr $19,000

            To Cash A/c                       $19,000

(being cash is paid for store fixtures)