Question

On January 1, 2021, Displays Incorporated had the following account balances:
  

Accounts		Debit			Credit
Cash	$	32,000
Accounts receivable		29,000
Supplies		35,000
Inventory		65,000
Land		237,000
Accounts payable				$	38,000
Notes payable (7%, due next year)					30,000
Common stock					196,000
Retained earnings					134,000
Totals	$	398,000		$	398,000

From January 1 to December 31, the following summary transactions occurred:

1. Purchased inventory on account for $340,000.
2. Sold inventory on account for $620,000. The cost of the inventory sold was $320,000.
3. Received $576,000 from customers on accounts receivable.
4. Paid freight on inventory received, $34,000.
5. Paid $330,000 to inventory suppliers on accounts payable of $338,000. The difference reflects purchase discounts of $8,000.
6. Paid rent for the current year, $52,000. The payment was recorded to Rent Expense.
7. Paid salaries for the current year, $160,000. The payment was recorded to Salaries Expense.

Year-end adjusting entries:

1. Supplies on hand at the end of the year are $9,000.
2. Accrued interest expense on notes payable for the year.
3. Accrued income taxes at the end of December are $28,000.

Prepare the journal entries for transactions. (If no entry is required for a particular transaction/event, select "No journal entry required" in the first account field.)

Answer 1

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Event	Account	Debit	Credit
a	Inventory	$   340,000
	Accounts Payable		$     340,000
	(To record purchase of inventory)
b	Accounts Receivable	$   620,000
	Sale		$     620,000
	(To record sale)
	Cost of goods sold	$   320,000
	Inventory		$     320,000
	(To record cost of goods sold)
c	Cash	$   576,000
	Accounts Receivable		$     576,000
	(To record payment received)
d	Inventory	$     34,000
	Accounts Payable		$       34,000
	(To record payment of freight)
e	Accounts Payable	$   338,000
	Inventory (Discount)		$         8,000
	Cash		$     330,000
	(To record payment made)
f	Rent Expense	$     52,000
	Cash		$       52,000
	(To record rent expense payment)
g	Salaries expense	$   160,000
	Cash		$     160,000
	(To record payment of salaries)
Event	Account	Debit	Credit
a	Supplies Expense	$     26,000
	Supplies		$       26,000
	(To record supplies consumed) $35,000-$9,000
b	Interest Expense ($30,000*7%)	$        2,100
	Interest Payable		$         2,100
	(To record interest accrued)
c	Income Tax Expense	$     28,000
	Income Tax Payable		$       28,000
	(TO record income tax expense)