Question

Compute the following journal entries:

Paid 12-months rent in advance on October 1, 2019 of $24,000, debit pre-paid rent.

Purchased equipment for $60,000 on August 1, 2019 by giving a 9-month, 6% note for $60,000.

Paid $2,500 for maintenance and repairs.

Sold common stock (on January 1), 30,000 shares for $10 per share. The par value is $2 per share.

Sold preferred stock, 2,000 shares for $25 per share. The par value is $25 per share.

Paid utilities of $4,800.

Answer 1

Solution

1	Pre-paid rent	$       24,000.00
	Cash		$           24,000.00
	(To record payment for rent)
2	Equipment	$       60,000.00
	Notes payable		$           60,000.00
	(To record purchase of Equipment)
3	Maintenance and repairs expense	$         2,500.00
	Cash		$             2,500.00
	(To record maintenance and repairs expense)
4	Cash	$     300,000.00
	Common stock		$           60,000.00
	Paid in capital in excess of par -Common stock		$        240,000.00
	(To record issue of common stock)
5	Cash	$       50,000.00
	Preferred stock		$           50,000.00
	(To record issue of preferred stock)
6	Utilities expense	$         4,800.00
	Cash		$             4,800.00
	(to record utilities expense)