Question

Please make journal entry for the following transactions:

1 a) On February 1, the firm borrowed $10,000 from a bank at a 12% annual interest rate. The loan plus interest is due in twelve months

b) On March 1, the firm bought $15,000 of inventory on account

c) On April 4, the firm sold all inventory purchased in step (b) for $19,000 cash

d) On June 30, the firm made an adjusting entry for thr transaction in part (a) and closed its inclme statement accounts to prepare mid-year financial statements. Please assume that no transactions other than listed above took place between January 1 and June 30, 2018

Answer 1

S.No.	Date	Account Titles	Debit $	Credit $
a	February .1	Cash	10,000
		12% Note Payable		10,000
b	March .1	Inventory	15,000
		Accounts Payable		15,000
c	April 4.	Cash	19,000
		Sales		19,000
	April 4.	Cost of goods sold	15,000
		Inventory		15,000
d	June.30	Interest Expense	500
		Interest Payable		500
		(10,000 x 12% x 5/12 )
	June.30	Sales	19,000
		Cost of goods sold		15,000
		Interest Expense		500
		Income Summary		3,500
	June.30	Income Summary	3,500
		Retained earnings		3,500