Question

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

1. Issued 48,000 shares of non-par common stock in exchange for $480,000 in cash.
2. Purchased equipment at a cost of $76,000. $19,000 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 $146,000. The company uses the perpetual inventory system.
4. Credit sales for the month totaled $210,000. The cost of the goods sold was $126,000.
5. Paid $6,500 in rent on the warehouse building for the month of March.
6. Paid $7,150 to an insurance company for fire and liability insurance for a one-year period beginning April 1, 2021.
7. Paid $126,000 on account for the merchandise purchased in 3.
8. Collected $94,500 from customers on account.
9. Recorded depreciation expense of $1,900 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

Solution - Journal Entries

Serial number	Accounts Title	Debit	Credit
1	Cash	$480000
	Common stock		$480000
	(Being stock issued)
2	Equipment	$76000
	Cash		$19000
	Notes Payable		$57000
	(Equipment purchasing)
3	Merchandise Inventory	$146000
	Accounts Payable		$146000
	(Inventory purchase recorded)
4.1	Accounts Receivable	$210000
	Sales		$210000
	(Being sales recorded)
4.2	Cost of goods sold	$126000
	Merchandise Inventory		$126000
	(Cost of goods accounted)
5	Rent expenses	$6500
	Cash		$6500
	(Rent expenses paid)
6	Prepaid insurance	$7150
	Insurance		$7150
	(Insurance paid but relating to next year recorded)
7	Accounts Payable	$126000
	Cash		$126000
	(Amount paid to accounts payable recorded)
8	Cash	$94500
	Accounts receivable		$94500
	(Being cash received recorded)
9	Depreciation	$1900
	Accumulated depreciation		$1900
	(Depreciation recorded)