Question

The following transactions occurred during March 2021 for the Wainwright Corporation. The company owns and operates a wholesale warehouse.

1. Issued 24,000 shares of non-par common stock in exchange for $240,000 in cash.
2. Purchased equipment at a cost of $28,000. $7,000 cash was paid and a notes payable to the seller was signed for the balance owed.
3. Purchased inventory on account at a cost of $74,000. The company uses the perpetual inventory system.
4. Credit sales for the month totaled $90,000. The cost of the goods sold was $54,000.
5. Paid $3,500 in rent on the warehouse building for the month of March.
6. Paid $5,500 to an insurance company for fire and liability insurance for a one-year period beginning April 1, 2021.
7. Paid $54,000 on account for the merchandise purchased in 3.
8. Collected $40,500 from customers on account.
9. Recorded depreciation expense of $700 for the month on the equipment.

Prepare journal entries to record each of the transactions listed above. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Journal entry

No	General journal	Debit	Credit
a	Cash	240000
	Common Stock		240000
b	Equipment	28000
	Cash		7000
	Notes payable		21000
c	Inventory	74000
	Account payable		74000
d	Account receivable	90000
	Sales revenue		90000
	Cost of goods sold	54000
	Inventory		54000
e	Rent expense	3500
	Cash		3500
f	Prepaid insurance	5500
	Cash		5500
g	Account payable	54000
	Cash		54000
h	Cash	40500
	Account receivable		40500
i	Depreciation expense	700
	Accumulated depreciation-equipment		700