Question

The owners paid $3,500 for website advertising. They were able to get a good deal because one of the company's owners also owns stock in the website company. The owners also paid $6,000 for some advertising in local newspapers. [Note: Combine both transactions into one entry] multiple accounts and dollar amt entry

Cash Accounts Receivable Inventory Prepaid Rent Fixtures and Equipment Accounts Payable Interest Payable Wages Payable Notes Payable Paid-in Capital Retained Earnings Leave Blank   

Account: Dollar amount:  

Sales were $62,000. Cost of merchandise sold was 50% of sales. 60% of sales were on open account. [Note: Record the complete entry for the sales first and the complete entry for the expenses second]

Account:    dollar amount:  

Answer 1

The following journal entries can be passed :-

Journal Entries:-
	Particulars	Amount	Amount
1.)	Cash A/c Dr.	24,800
	Accounts Receivable A/c Dr.	37,200
	To Sales A/c		62,000
	(To record the sales made on cash and open account)
2.)	Advertising Expenses A/c Dr.	9,500
	To Cash A/c		9,500
	(To record the payment of advertisement expenses - 3000 for website advertising and 6500 for newspaper advertising)

Further the cost of Merchandise sold can be recorded as follows :-

	Particulars	Amount	Amount
3.)	Cost of Goods Sold	31,000
	To Merchandise Inventory A/c		31,000
	(To record the cost of goods sold)
	(62,000 * 50%)

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