Question

Record the following transactions in the general journal provided below.

Type 0 in any cell that you wish to leave blank. Please DO NOT use abbreviations.

1.    Sold 10 shares of stock for $5 each. The stock had a $1 per share par value.

2.    Borrowed $100 from the bank at 8% annual interest.

3.    Earned $30 of revenue by providing consulting services to a client on credit.

4.    Paid $20 in cash for operating expenses.

5.    Paid the annual interest on the bank loan (number 2 above) at year-end

Answer 1

Answer:

journal entries:

1. Entry for sale of share

Cash received= 10*5 = 50

Shares at par value = 10*1 = 10

Excess amount received= 10*(5-1) = 40

Cash account. Dr. 50

To common stock account. 10

To additional paid in capital. 40

2. Entry for borrowing from bank

Cash account. Dr. 100

To bank loan account. 100

3. Entry for revenue earned from consulting services

Cash account. Dr. 30

To service revenue account. 30

4 cash payment of operating expense

Operating expense account. Dr. 20

To cash account. 20

5. Entry for annual interest on bank loan paid

Interest = 100*8% = 8

Interest expense account Dr. 8

To cash account. 8

SUMMARY

All the necessary journal entries has been provided.