Question

The following transactions occurred during the month of June 2021 for the Stridewell Corporation. The company owns and operates a retail shoe store.

1. Issued 95,000 shares of common stock in exchange for $475,000 cash.
2. Purchased office equipment at a cost of $83,750. $33,500 was paid in cash and a note payable was signed for the balance owed.
3. Purchased inventory on account at a cost of $190,000. The company uses the perpetual inventory system.
4. Credit sales for the month totaled $323,000. The cost of the goods sold was $161,500.
5. Paid $4,250 in rent on the store building for the month of June.
6. Paid $2,280 to an insurance company for fire and liability insurance for a one-year period beginning June 1, 2021.
7. Paid $137,275 on account for the merchandise purchased in 3.
8. Collected $64,600 from customers on account.
9. Paid shareholders a cash dividend of $4,750.
10. Recorded depreciation expense of $1,675 for the month on the office equipment.
11. Recorded the amount of prepaid insurance that expired for the month.

Prepare journal entries to record each of the transactions and events listed above. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

• 1

  Issued 95,000 shares of common stock in exchange for $475,000 cash.

• 2

  Purchased office equipment at a cost of $83,750. $33,500 was paid in cash and a note payable was signed for the balance owed.

• 3

  Purchased inventory on account at a cost of $190,000. The company uses the perpetual inventory system.

• 4

  Credit sales for the month totaled $323,000.

• 5

  The cost of the goods was $161,500.

• 6

  Paid $4,250 in rent on the store building for the month of June.

• 7

  Paid $2,280 to an insurance company for fire and liability insurance for a one-year period beginning June 1, 2021.

• 8

  Paid $137,275 on account for the merchandise purchased in 3.

• 9

  Collected $64,600 from customers on account.

• 10

  Paid shareholders a cash dividend of $4,750.

• 11

  Recorded depreciation expense of $1,675 for the month on the office equipment.

• 12

  Recorded the amount of prepaid insurance that expired for the month.

Answer 1

Journal entry

No	General Journal	Debit	Credit
1	Cash	475000
	Common Stock		475000
2	Equipment	83750
	Cash		33500
	Notes payable		50250
3	Inventory	190000
	Account payable		190000
4	Account receivable	323000
	Sales revenue		323000
5	Cost of goods sold	161500
	Inventory		161500
6	Rent expense	4250
	Cash		4250
7	Prepaid insurance	2280
	Cash		2280
8	Account payable	137275
	Cash		137275
9	Cash	64600
	Account receivable		64600
10	Cash dividend	4750
	Cash		4750
11	Depreciation expense	1675
	Accumulated depreciation-equipment		1675
12	Insurance expense	190
	Prepaid insurance (2280/12)		190