Question

The following transactions occurred during the month of June 2021 for the Stridewell Corporation. The company owns and operates a retail shoe store.

Issued 55,000 shares of common stock in exchange for $275,000 cash.
Purchased office equipment at a cost of $53,750. $21,500 was paid in cash and a note payable was signed for the balance owed.
Purchased inventory on account at a cost of $110,000. The company uses the perpetual inventory system.
Credit sales for the month totaled $187,000. The cost of the goods sold was $93,500.
Paid $2,250 in rent on the store building for the month of June.
Paid $1,320 to an insurance company for fire and liability insurance for a one-year period beginning June 1, 2021.
Paid $79,475 on account for the merchandise purchased in 3.
Collected $37,400 from customers on account.
Paid shareholders a cash dividend of $2,750.
Recorded depreciation expense of $1,075 for the month on the office equipment.
Recorded the amount of prepaid insurance that expired for the month.

Prepare journal entries to record each of the transactions and events listed above.

Answer 1

Journal entries

No	General Journal	Debit	Credit
a	Cash	275000
	Common Stock		275000
b	Equipment	53750
	Cash		21500
	Notes payable		32250
c	Inventory	110000
	Account payable		110000
d	Account receivable	187000
	Sales revenue		187000
	Cost of goods sold	93500
	Inventory		93500
e	Rent expense	2250
	Cash		2250
f	Prepaid insurance	1320
	Cash		1320
g	Account payable	79475
	Cash		79475
h	Cash	37400
	Account receivable		37400
i	Cash dividend	2750
	Cash		2750
j	Depreciation expense	1075
	Accumulated depreciation-equipment		1075
k	Insurance expense (1320/12)	110
	Prepaid insurance		110