Question

1. Issued 30,000 shares of common stock in exchange for $300,000 in cash.

Answer 1

Solution :

       Assets          =   Liabilities   +   Paid in capital   +   retained earnings

1.   $ 300,000                                  $ 300,000

2.   $ 30,000             $ 30,000

3.   $ 90,000             $ 90,000

4.   $ 50,000                                                                        $ 50,000

5.   $ 5,000                                                                          $ 5,000

6.   $ 6,000                                                                          $ 6,000

7.   $ 70,000            $ 70,000        

8.      --

9.    $ 1,000                                                                          $ 1,000

Point 4 -- the accounts receivable will increase by $ 120,000 due to the credit sales and the cost of goods sold.

Point 6 -- Adjustments entry at the year end for 3 months from January to March 2022 should be reduced from both assets and retained earnings and the adjusted amount would be $ 4500.

Point 8 -- No impact as the cash is collected against the account receivable and both are assets.