Question

The following transactions occurred during March 2016 for the Wainwright Corporation. The company owns and operates a wholesale warehouse.

1.	Issued 44,000 shares of common stock in exchange for $440,000 in cash.
2.	Purchased equipment at a cost of $54,000. $17,000 cash was paid and a note payable was signed for the balance owed.
3.	Purchased inventory on account at a cost of $106,000. The company uses the perpetual inventory system.
4.	Credit sales for the month totaled $190,000. The cost of the goods sold was $84,000.
5.	Paid $6,400 in rent on the warehouse building for the month of March.
6.	Paid $7,400 to an insurance company for fire and liability insurance for a one-year period beginning April 1, 2016.
7.	Paid $84,000 on account for the merchandise purchased in 3.
8.	Collected $69,000 from customers on account.
9.	Recorded depreciation expense of $2,400 for the month on the equipment.

Post the above transactions to below T-accounts. Assume that the opening balances in each of the accounts is zero.

Answer 1

Solution:

Cash					Common Stock
Beg. Bal.	$0	$17,000	(2)		Beg. Bal	$0	$440,000	(1)
(1)	$440,000	$6,400	(5)
(8)	$69,000	$7,400	(6)
		$84,000	(7)		End. Bal		$440,000
End. Bal	$394,200
Equipment					Notes Payable
Beg. Bal.	$0				Beg. Bal.		$0
(2)	$54,000						$37,000	(2)
End. Bal	$54,000				End. Bal		$37,000
Inventory					Accounts Payable
Beg. Bal.	$0	$84,000	(4)		Beg. Bal		$0
(3)	$106,000				(7)	$84,000	$106,000	(3)
End. Bal	$22,000				End. Bal		$22,000
Sales Revenue					Accounts Receivable
Beg. Bal.		$0			Beg. Bal	$0	$69,000	(8)
		$190,000	(4)		(4)	$190,000
End. Bal		$190,000			End. Bal	$121,000
Cost of Goods Sold					Rent Expense
Beg. Bal.					Beg. Bal	$0
(4)	$84,000				(5)	$6,400
End. Bal	$84,000				End. Bal	$6,400
Prepaid Insurance					Rent Expense
Beg. Bal.	$0				Beg. Bal	$0
(6)	$7,400				(5)	$6,400
End. Bal	$7,400				End. Bal	$6,400
Depreciation Expense					Accumulated Depreciation - Equipment
Beg. Bal.	$0				Beg. Bal		$0
(9)	$2,400						$2,400	(9)
End. Bal	$2,400				End. Bal		$2,400

Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you