Question

Sarah Jones started a new business in January, 2012. Thefollowing are selected events that occurred in the businessduring the first year of operation. Please provide journalentries for these events (explanations are not necessary). 1. Sarah invested $65,000 to start the business, SaJon Inc.and received 100 shares of stock from the business. 2. Purchased inventory of $40,000 on account. 3. Signed a lease for two years for $24,000. The company paid $5,000 immediately; this was two month's rent in advance plus a security deposit. 4. Sold inventory, which cost $4,000, on account for $7,000 (recognize both the revenue and the expense). 5. Paid for the inventory purchased in 2). 6. Received payment for the amount billed in 4). 7. Paid $3,000 in salaries .8. Recognized the rent expense for the first month

Answer 1

JOURNAL ENTRIES
S.NO.	ACCOUNTS TITLE AND EXPLANATIONS				DEBIT $	CREDIT $
1	Cash Account Dr.				65000
	Common Stock					65000
2	Mercahndise Inventory Dr.				40000
	Accounts payable					40000
3	Prepaid rent Dr.				4000
	Security deposit Dr.				1000
	Cash Account					5000
4	Accounts receivable Dr.				7000
	sales revenue					7000
	Cost of Goods sold Ddr.				4,000
	Merchandise Inventory					4000
5	Accounts Payable Dr.				40000
	Cash account					40000
6	Cash Account Dr.				7000
	Accounts receivable					7000
7	Salaries expense Dr.				3000
	Cash Account					3000
8	Rent expense Dr.				2000
	Prepaid rent Account					2000