Question

Recording Transactions Using Journal Entries and T-Accounts Receive $40,000 cash in exchange for common stock. Purchase $4,000 of inventory on credit. Sell inventory for $6,000 on credit. Record $4,000 for cost of inventory sold in 3. Collect $6,000 cash from transaction 3. Acquire $10,000 of equipment by signing a note. Pay wages of $2,000 in cash. Pay $10,000 on a note payable that came due. Pay $4,000 cash dividend.

Answer 1

Answer:

a. See the explanation below for the journal entries.

b. each of the following accounts have an ending balance (in red color) after the recording as follows:

Cash, $27,000;

Common stock, $40,000;

Accounts payable, $4,000;

Accounts receivable, $3,000;

Equipment, $10,000.

However, each of the other accounts will have a zero ending balance.

Explanation:

a. Recording Transactions Using Journal Entries

The journal entries will look as follows:

Accounts Name                               Dr ($)                 Cr ($)    

Cash                                               40,000

Common stock                                                         40,000

(To record cash receipts for common stock.)                          

Inventory                                           4,000

Accounts payable                                                      4,000

(To record inventory purchase.)                                              

Account receivable                          6,000

Sales                                                                           6,000

(To record credit sales.)                                                            

Cost of sales                                     4,000

Inventory                                                                     4,000

(To record cost of sales.)                                                            

Cash                                                  3,000

Account receivable                                                    3,000

(To cash collected from credit sales.)                                        

Equipment                                       10,000

Note payable                                                            10,000

(To record purchase of equipment by issuing note.)                

Wages                                               2,000

Cash                                                                            2,000

(To record wages paid in cash.)                                                

Note payable                                   10,000

Cash                                                                            10,000

(To record note due paid.)                                                          

Dividend                                            4,000

Cash                                                                             4,000

(To record cash dividend paid.)                                                  

b. Recording Transactions Using T-Accounts

Note: See the attached excel file for the  T-Accounts.

From the attached excel file, each of the following accounts have an ending balance (in red color) after the recording as follows:

Cash, $27,000;

Common stock, $40,000;

Accounts payable, $4,000;

Accounts receivable, $3,000;

Equipment, $10,000.

However, each of the other accounts will have a no or zero ending balance.

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