Question

Provide journal entries for the following transactions:

1. Investors contributed $90,000 in the business and received ordinary shares as evidence of ownership.
2. Salaries of $4,000 was paid in cash.
3. Equipment with a cost of $20,000 was purchased on credit.
4. Annual depreciation of an equipment is $5,000.
5. Interest income of $6,000 was received in cash.

Answer 1

Ans:

Journal entry:
S.no.	Accounts title and explanations		Debit $	Credit $
a.	Cash		90000
	Common Stock capital			90000
	(To record issuance of stock for Cash)
b.	Salaries expense		4000
	Cash account			4000
	(To record salaries paid)
c.	Equipment account		20000
	Accounts payable			20000
	(To record purchase of equipment on account)
d.	Depreciation expenses'		5000
	Accumulated depreciation			5000
	(To record depreciation expenses)
e.	Cash account		6000
	Interest revenue			6000
	(To record interest received)

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