E 24 Journal entries LO220 The following transactions occurr

E 2-4 Journal entries LO2-20 The following transactions occurred during the month of June 2018 for the Stridewell Corporation. The company owns and operates a retail shoe store. 1. Issued 100,000 shares of common stock in exchange for $500,000 cash. 2. Purchased office equipment at a cost of $100,000. $40.000 was paid in cash and a note payable was signed for the balance owed. 3. Purchased inventory on accoundat a cost of $200,000. The company uses the perpetual inventory system. 4. Credit sales for the month totaled $280.000. The cost of the goods sold was $140,000. 5. Paid S6.000 in rent on the store building for the month of June an insurance company for fire and liability insurance for a one-year period beginning June 1, 2018. 7. Paid $120,000 on account for the merchandise purchased in 3, 8. Collected $55,000 from customers on account 9. Paid shareholders a cash dividend of S5.000. 10 Recorded depreciation expense of $2.000 for the month on the office equipment. 11. Recorded the amount of prepaid insurance that expired for the month. ??

Solution

Journal entries: S.no. Accounts title and explanation Debit $ Credit $ 1 Cash account Dr. 500000      Common Stock capital 500000 2 Office equipment account Dr. 100000      Cash account 40000       Notes payable 60000 3 Inventory Account Dr. 200000      Accounts payable 200000 4 Accounts receivable Dr. 280000      Sales revenue 280000 Cost of Goods sold Dr. 140000      Inventory 140000 5 Rent expense Account Dr. 6000      Cash account 6000 6 Prepaid insurance Account Dr. 3000       Cash account 3000 7 Inventory Account Dr. 120000      Accounts payable 120000 8 Cash Account Dr. 55000      Accounts receivable 55000 9 Dividend Account Dr. 5000       Cash account 5000 10 Depreciation expense Account Dr. 2000      Accumulated depreciation-Equipment 2000 11 Insurance expense Account Dr. 250      Prepaid insurance Account (3000/12) 250