Question

Company A sells blankets. The following transactions occurred during March: Mar 3 Placed an order on credit with the blanket supplier for 100 blankets at a price of $70 each. Mar 7 Hired a new employee. The employee will earn $80,000 per year plus benefits. Mar 17 Received the order placed on March 3. No payment is yet made to the supplier. Mar 25 Sold 60 of the blankets purchased on March 3. The sale was on credit. Mar 28 Received half of the payment for the March 25 sale. There were five events in the month of March. How many of them do not require a journal entry to be made? Select one: a. One b. Two c. Three d. Four

Answer 1

There are 5 transaction and Out of which only 3 are required to pass journal entry.

a. Placed an order on credit with the blanket supplier for 100 blankets at a price of $70 each.

No Journal Entry Required

b. Hired a new employee. The employee will earn $80,000 per year plus benefits.

No Journal Entry Required

c. Received the order placed on March 3. No payment is yet made to the supplier.

Yes Journal Entry is required, because order was received hence stock will be debited and liability would be created.

d. Sold 60 of the blankets purchased on March 3. The sale was on credit.  

Yes Journal Entry is required, because sale was made hence Account receivable will be debited and sales would be credited.

e. Received half of the payment for the March 25 sale.

Yes Journal Entry is required, because cash was received hence cash would be debited and account receivable would be credited.

The reason there is no sale or sale revenue. Only a record will be kept by company in order register