Question

Provide journal entries for the following transactions:

Investors contributed $70,000 in the business and received ordinary shares as evidence of ownership. Employee salaries of $2,000 were paid in cash. Equipment with a cost of $10,000 was purchased on credit (i.e., Accounts payable). The annual depreciation of equipment is $5,000. Interest income of $2,000 was received in cash. Narrations are not required for the entries.

Answer 1

Journal entry:
S.no.	Accounts title and explanations		Debit $	Credit $
a.	Cash				70000
	Common Stock capital			70000
	(for issuance of stock for Cash)
b.	Salaries expense			2000
	Cash account				2000
	(for salaries paid)
c.	Equipment account			10000
	Accounts payable				10000
	(for purchase of equipment on account)
d.	Depreciation expenses'		5000
	Accumulated depreciation			5000
	(for depreciation expenses)
e.	Cash account			2000
	Interest revenue				2000
	(for interest received)