Question

J.K. Builders was incorporated on July 1.

1. Received $79,000 cash invested by owners and issued common stock.
2. Bought an unused field from a local farmer by paying $69,000 cash. As a construction site for smaller projects, it is estimated to be worth $74,000 to J.K. Builders.
3. A lumber supplier delivered lumber supplies to J.K. Builders for future use. The lumber supplies would have normally sold for $19,000, but the supplier gave J.K. Builders a 12 percent discount. J.K. Builders has not yet received the $16,720 bill from the supplier.
4. Borrowed $34,000 from the bank with a plan to use the funds to build a small workshop in August. The loan must be repaid in two years.
5. One of the owners sold $19,000 worth of his common stock to another shareholder for $20,000.
   

Prepare journal entries for the above transactions from the first month of business. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Answer 1

SOLUTION

S.No.	Accounts titles and Explanation	Debit ($)	Credit ($)
A.	Cash	79,000
	Common stock		79,000
	(To record cash received by issuing common stock)
B.	Land	69,000
	Cash		69,000
	(To record purchase of Land by cash)
C.	Supplies	16,720
	Accounts payable		16,720
	(To record supplies purchased on account)
D.	Cash	34,000
	Notes payable		34,000
	(To record money borrowed by bank)
E.	No Journal Entry Required