The following transactions occurred during March 2018 for th

The following transactions occurred during March 2018 for the Wainwright Corporation. The company owns and operates a wholesale warehouse 1. Issued 20,000 shares of common stock in exchange for $200,000 in cash. 2. Purchased equipment at a cost of $20,000. $5,000 cash was paid and a note payable was signed for the balance owed. 3. Purchased inventory on account at a cost of $62,000. The company uses the perpetual inventory system 4. Credit sales for the month totaled $70,000. The cost of the goods sold was $42,000 5. Paid $3,000 in rent on the warehouse building for the month of March. 6. Paid $5,200 to an insurance company for fire and liability insurance for a one-year period beginning April 1, 2018. 7. Paid $42,000 on account for the merchandise purchased in 3 8. Collected $31,500 from customers on account. 9. Recorded depreciation expense of $500 for the month on the equipment.

Solution

Journal Entries (Amount in $)

S.No.	Accounts titles and explanation	Debit	Credit
1)	Cash	200,000
	Common Stock		200,000
	(To record the issue of shares of common stock)
2)	Equipment	20,000
	Cash		5,000
	Notes Payable ($20,000-$5,000)		15,000
	(To record the purchase of equipment)
3)	Merchandise Inventory	62,000
	Accounts Payable		62,000
	(To record the purchase of inventory on account)
4)	Accounts Receivable	70,000
	Sales revenue		70,000
	(To record the credit sales for the month)
	Cost of goods sold	42,000
	Merchandise Inventory		42,000
	(To record the cost of goods sold of credit sales)
5)	Rent expense	3,000
	Cash		3,000
	(To record the rent paid for the month of march)
6)	Prepaid insurance	5,200
	Cash		5,200
	(To record the prepaid insurance)
7)	Accounts Payable	42,000
	Cash		42,000
	(To record the amount paid for accounts payable)
8)	Cash	31,500
	Accounts Receivable		31,500
	(To record the receipt of cash from accounts receivable)
9)	Depreciation expense	500
	Accumulated depreciation-Equipment		500
	(To record the depreciation expense)