Question

Acquired $16,000 cash from the issue of common stock. Purchased inventory for $5,100 cash. Sold inventory costing $3,060 for $5,202 cash. Paid $850 for advertising expense. Required a. Record the general journal entries for the preceding transactions. b. Post each of the entries to T-accounts. c. Prepare a trial balance to prove the equality of debits and credits.

Answer 1

a) Journal Entries:

Serial No.	Particulars	Debit($)	Credit($)
1	Cash	16,000
	To Common Stock		16,000
	(Being common stock issued for cash)
2	Purchases	5,100
	To Cash		5,100
	(Being purchases made for cash)
3	Cash	5,202
	To Sales		5,202
	(Being sales made and cash received for sales)
4	Advertising Expense	850
	To Cash		850
	(Being cash paid for advertising expense)

b) T- Accounts:

Cash Account

Particulars	Debit($)	Particulars	Credit($)
To common stock	16,000	By purchases	5,100
To sales	5,202	By advertising expense	850
		By Balance c/d(balancing figure)	15,252
	21,202		21,202

Sales Account

Particulars	Debit($)	Particulars	Credit($)
To Balance c/d(balancing figure)	5,202	By Cash	5,202
	5,202		5,202

Common Stock Account

Particulars	Debit($)	Particulars	Credit($)
To Balance c/d(balancing figure)	16,000	By Cash	16,000
	16,000		16,000

Purchases Account

Particulars	Debit($)	Particulars	Credit($)
To Cash	5,100	By Balance c/d(balancing figure)	5,100
	5,100		5,100

Advertising Expense Account

Particulars	Debit($)	Particulars	Credit($)
To Cash	850	By Balance c/d(balancing figure)	850
	850		850

c)Trial Balance:

Particulars	Debit($)	credit($)
Cash	15,252
Common Stock		16,000
Sales		5,202
Purchases	5,100
Advertising Expense	850
	21,202	21,202