Question

Three former college classmates have decided to pool a variety of work experiences by opening a store near campus to sell wireless equipment to students. The business has been incorporated as University Wireless.

Required: Several transactions occurred in March. Each is described separately in this folder. For each transaction, indicate the accounts that are affected, whether they increase or decrease, and the amount of the increase or decrease.

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

Transaction 1
On March 1, the three classmates opened a checking account for The Wire at a local bank. They each deposited $22,000 in exchange for shares of stock. A few of their friends also purchased stock for $15,000 that was deposited in The Wire account.
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Transaction 2
The company quickly acquired $38,000 in inventory, 60% of which was acquired on open accounts that were payable after 30 days. The rest was paid for in cash.
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Transaction 3
A one-year store rental lease was signed on March 1 for $1,100 per month, and rent for the first 2 months was paid in advance. [Note: Record the complete entry for the March 1 transaction first and the complete adjusting entry on March 31 second.]
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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 $5,500 for some advertising in local newspapers. [Note: Combine both transactions into one entry].
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Transaction 5
Sales were $68,000. Cost of merchandise sold was 50% of sales. 40% of sales were for cash. [Note: Record the complete entry for the sales first and the complete entry for the expenses second]
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Transaction 5
Sales were $68,000. Cost of merchandise sold was 50% of sales. 40% of sales were for cash. [Note: Record the complete entry for the sales first and the complete entry for the expenses second]
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Transaction 7
Miscellaneous expenses were $2,000, all paid for with cash.
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Transaction 8
On March 1, fixtures and equipment were purchased for $6,000 with a downpayment of $2,000 and a $4,000 note, payable in one year. Interest of 4% per year was due when the note was repaid. The estimated life of the fixtures and equipment is 10 years with no expected salvage value. [Note: Record the complete entry for the March 1 equipment purchase first, the March 31 depreciation adjusting entry second, and the March 31 interest adjusting entry third. Also, round all answers to the nearest cent.]
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Transaction 9
Cash dividends totaling $4,400 were paid to stockholders on March 31.
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Answer 1

1
Account	Dollar amount
Cash	81000	=(22000*3)+15000
Paid in capital	81000
Select leave blank for other columns
2
Account	Dollar amount
Cash	-15200
Inventory	38000
Accounts Payable	22800
Select leave blank for other columns
3
Account	Dollar amount
Cash	-2200
Prepaid rent	2200
Prepaid rent	-1100
Retained earnings	-1100
Leave Blank
4
Account	Dollar amount
Cash	-9000
Retained earnings	-9000
Select leave blank for other columns
5
Account	Dollar amount
Cash	27200
Accounts Receivable	40800
Retained earnings	68000
Inventory	-34000	=68000*50%
Retained earnings	-34000
Leave Blank
7
Account	Dollar amount
Cash	-2000
Retained earnings	-2000
Leave Blank
Leave Blank
8
Account	Dollar amount
Cash	-2000
Fixtures and Equipment	6000
Notes Payable	4000
Fixtures and Equipment	-50.00	=6000/10/12
Retained earnings	-50.00
Interest Payable	13.33	=4000*4%/12
Retained earnings	-13.33
Leave Blank
9
Account	Dollar amount
Cash	-4400
Retained earnings	-4400
Select leave blank for other columns
Note: Transaction 6 has not been provided in question