Question

1. On January 1, 2018 Potter Consulting Services Incorporated (PCS Inc.) opened for business. The corporation completed the following transactions during January. Analyze each transaction and make the appropriate journal entry in the space provided. (60 Points)

a.   January 1   Each stockowner contributed cash and received Common Stock. A total of $500,000 cash was paid for 500,000 shares with a $1 par value per share.

b.   January 1 Paid 3 months office space rent in advance in cash for a total of $6,000

c. January 2 Purchased Office Furniture on account for $14,000.

d.   January 2 Purchased 500 copies of Planning Software which was placed in Merchandise Inventory to be sold to clients. Cost was $5.00 per copy for a total of $2,500. $500 was paid in cash and the other $2,000 was on account.

Answer 1

Answer)

JOURNAL
Date	Particulars	Debit	Credit
January'1	Cash	$500,000
	Common Stock   (500,000 shares X $ 1 per share)		$500,000
	(Being shares issued to common stockhoders in cash)
January'1	Prepaid Rent	$6,000
	Cash		$6,000
	(Being rent for 3 months paid in advance)
January'2	Office furniture	$14,000
	Accounts Payable		$14,000
	(being office furniture purchased on account0
January'2	Purchase	$2,500
	Cash		$500
	Account Payable		$2,000
	(being inventory purchased)