Question

The following transactions occurred during the month of June 2018 for the Stridewell Corporation. The company owns and operates a retail shoe store. Issued 145,000 shares of common stock in exchange for $725,000 cash. Purchased furniture and fixtures at a cost of $117,500. $47,000 was paid in cash and a note payable was signed for the balance owed. Purchased inventory on account at a cost of $290,000. The company uses the perpetual inventory system. Credit sales for the month totaled $493,000. The cost of the goods sold was $246,500. Paid $6,750 in rent on the store building for the month of June. Paid $3,480 to an insurance company for fire and liability insurance for a one-year period beginning June 1, 2018. Paid $209,525 on account for the merchandise purchased in 3. Collected $98,600 from customers on account. Paid shareholders a cash dividend of $7,250. Recorded depreciation expense of $2,350 for the month on the furniture and fixtures. Recorded the amount of prepaid insurance that expired for the month. Required: 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.)

Answer 1

Date	Account Titles and Explanation	Debit	Credit
	Cash a/c	$725,000
	Common Stock a/c		$725,000
	[To record issue of common stock for cash]
	Furniture and fixtures a/c	$117,500
	Cash a/c		$47,000
	Notes Payables [$117,500 - $47,000]		$70,500
	[To record purchase of furniture and fixtures]
	Inventory a/c	$290,000
	Accounts payable a/c		$290,000
	[To record the purchase of inventory on account]
	Accounts receivable a/c	$493,000
	Sales revenue a/c		$493,000
	[To record the credit sales]
	Cost of Goods sold a/c	$246,500
	Inventory a/c		$246,500
	[To record the cost of sales]
	Rent Expense a/c	$6,750
	Cash a/c		$6,750
	[To rent paid for the month of June]
	Prepaid Insurance a/c	$3,480
	Cash a/c		$3,480
	[To record Insurance paid for 1 year]
	Accounts payable a/c	$209,525
	Cash a/c		$209,525
	[To record cash paid to suppliers]
	Cash a/c	$98,600
	Account receivable a/c		$98,600
	[To record cash received from the customers]
	Cash dividend a/c	$7,250
	Cash a/c		$7,250
	[To record cash dividend paid]
	Depreciation Expense a/c	$2.350
	Accumulated depreciation - Furniture & Fixtures		$2,350
	[To record depreciation for the month of June]
	Insurance Expense a/c [Note 1]	$290
	Prepaid Insurance a/c		$290
	To record insurance expense for the month of June]

Note - 1 - Calculation of Insurance expense

Total Insurance amount paid for 12 months (Prepaid Insurance) = $3,480

Insurance amount for 1 month = $3,480 ÷ 12 months = $290

Therefore,

Insurance expense to be recorded for the month of June = $290