Question

Analyze each transaction and prepare the appropriate journal entry. Use journal paper found in Canvas, Modules, Accounting Forms.

The following transactions occurred during March, 2020 for the ABC Corporation. The company owns and operated a wholesale warehouse.

1) Issued 32,500 shares of Common Stock in exchange for $325,000 in cash

2) Purchased equipment at a cost of $36,000. $12,100 cash was paid and a long term note payable to the seller was signed for the balance owed

3) Purchased inventory on account at a cost of $97,000. The company uses the perpetual inventory system

4) Credit sales for the month totaled $150,000. The cost of the good sold was $75,445

5) Paid $4,400 in rent on the warehouse building for the month of March, 2020

6) Paid $5,100 to an insurance agency for fire and liability insurance for a one-year period beginning April 1, 2020

7) Paid $75,000 on account for the merchandise purchase in item #3

8) Collected $68,750 from customer on account

9) Recorded depreciation expense of $1,100 for the month on the equipment

Section B

Analyze each transaction and prepare the appropriate adjusting entry. Use journal paper found in Canvas, Modules, Accounting Forms.

The Azmie Wholesale Food Company’s fiscal year-end is June 30. The company issues quarterly financial statement requiring the company to prepare adjusting entries at the end of each quarter. Assuming all quarterly adjusting entries were properly recorded, prepare the necessary year-end adjusting entries at the end of June 30, 2021 for the following situations:

1) On December 1, 2020, the Company paid its annual insurance premium of $8,000 for the year beginning December 1 and debited prepaid insurance

2) On August 1, 2020, the Company borrowed $88,000 from a local bank. The note requires principal and interest at 9% to be paid on August 31, 2021

3) Azmie owns a warehouse that it rents to another company. On January 1, 2021, Azmie collected $25,000 representing rent for the year 2021 calendar year and credited Deferred (Unearned) Rent Revenue

4) Depreciation on the office building is $16,000 for the fiscal year

5) Employee salaries for the month of June, 2021 of $20,000 will be paid on July 20, 2021

Answer 1

ABC Corporation

	Account Name	Debit($)	Credit($)
1	Cash	325000
	Common stock		325000
2	Equipment	36000
	Cash		12100
	Note payable		23900
3	Inventory	97000
	Accounts payable		97000
4	Accounts receivable	150000
	Sales revenue		150000
	Cost of goods sold	75445
	Inventory		75445
5	Rent expense	4400
	Cash		4400
6	Prepaid Insurance	5100
	Cash		5100
7	Accounts payable	75000
	Cash		75000
8	Cash	68750
	Accounts receivable		68750
9	Depreciation expense-Equipment	1100
	Accumulated derpeciation-Equipment		1100