Question

The following transactions occurred during the month of June 2018 for the Stridewell Corporation. The company owns and operates a retail shoe store
1. Issued 115,000 shares of common stock in exchange for $575,000 cash.
2. Purchased furniture and fixtures at a cost of $95,000. $38,000 was paid in cash and a note payable was signed for the balance owed
3. Purchased inventory on account at a cost of $230,000. The company uses the perpetual inventory system.
4. Credit sales for the month totaled $391,000. The cost of the goods sold was $195,500
5. Paid $5,000 in rent on the store building for the month of June
6. Paid $2,640 to an insurance company for fire and liability insurance for a one-year period beginning June 1, 2018
7. Paid $166,175 on account for the merchandise purchased in 3
8. Collected $78,200 from customers on account.
9. Paid shareholders a cash dividend of $5,750
10. Recorded depreciation expense of $1,900 for the month on the furniture and fixtures
11. Recorded the amount of prepaid insurance that expired for the month.
Required
Prepare journal entries to record each of the transactions and events listed above. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list View journal entry worksheet No Transaction General Journal Debit Credit 01 Cash 575,000 Common stock 575,000

Answer 1

Answer:

See the journal entries below.

Explanation:

Tr.    General Journal                           Dr ($)                Cr ($)          

1.       Cash                                          575,000

        Common stock                                                  575,000

        (To record common stock issued for cash.)                          

2.     Furniture and fixtures                 95,000

       Cash                                                                      38,000

       Note payable                                                        57,000

       (To record purchase of furniture and fixtures.)                      

3.     Merchandise inventory            230,000

       Account payable                                                   230,00

      (To record inventory purchased on account.)                          

4a.    Account receivable                   391,000

       Sales                                                                       391,00

       (To record credit sales).                                                          

4b.     Cost of goods sold                  195,500

          Merchandise inventory                                    195,000

         (To record cost of inventory sold.)                                        

5.       Rent expenses                            5,000

         Cash                                                                       5,000

        (To record interest paid for June.)                                        

6.        Prepaid insurance                      2,640

           Cash                                                                      2,640

         (To record prepaid insurance.)                                            

7.        Account payable                       166,175

          Cash                                                                    166,175

     (To record payment for merchandise inventory bought on account.)

8.        Cash                                            78,200

           Account receivable                                          78,200

           (To record cash received from customer.)                            

9.        Dividend paid                                 5,750

           Cash                                                                     5,750

          (To record cash dividend paid.)                                              

10.      Depreciation expenses                  1,900

          Accumulated Dep. - F $ F                                     1,900

         (To record record depreciation expenses for Furniture & F.)  

11.       Insurance expenses (2,640 / 12)      220

          Prepaid insurance                                                   220

          (To record insurance expenses for the month.)