Question

The following transactions occurred during the month of June 2018 for the Stridewell Corporation. The company owns and operates a retail shoe store.

1.Issued 140,000 shares of common stock in exchange for $700,000 cash.

2.Purchased furniture and fixtures at a cost of $113,750. $45,500 was paid in cash and a note payable was signed for the balance owed.

3.Purchased inventory on account at a cost of $280,000. The company uses the perpetual inventory system.

4.Credit sales for the month totaled $476,000. The cost of the goods sold was $238,000.

5.Paid $6,500 in rent on the store building for the month of June.

6.Paid $3,360 to an insurance company for fire and liability insurance for a one-year period beginning June 1, 2018.

7.Paid $202,300 on account for the merchandise purchased in 3.

8.Collected $95,200 from customers on account.

9.Paid shareholders a cash dividend of $7,000.

10.Recorded depreciation expense of $2,275 for the month on the furniture and fixtures.

11.Recorded the amount of prepaid insurance that expired for the month.

Answer 1

Journal entry :

No.	accounts & explanation	debit	credit
1.	Cash	700000
	Common stock		700000
	(To record common stock exchange)
2.	Furniture & fixtures	113750
	Cash		45500
	Notes payable		68250
	(To record purchase of furniture and fixtures)
3	Merchandise inventory	280000
	Account payable		280000
	(To record purchase inventory)
4	Account receivable	476000
	Sales revenue		476000
	Cost of good sold	238000
	Merchandise inventory		238000
	(To record cost of goods sold and credit sales)
5	Rent expenses	6500
	cash		6500
	(To record rent paid)
6	Prepaid insurance	3360
	Cash		3360
	(To record prepaid insurance)
7	Account payable	202300
	Cash		202300
	(To record amount paid)
8	Cash	95200
	Account receivable		95200
	(To record amount received)
9	Dividend	7000
	cash		7000
	(To record dividend paid)
10	Depreciation expenses	2275
	Accumlated depreciation-furniture & fixtures		2275
	(To record depreciation)
11	Insurance expenses (3360/12)	280
	Prepaid insurance		280
	(To record insurance adjust)