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chapter_3_solution - Chapter 3 Homework Problems P3-2...

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Chapter 3 Homework Problems P3-2 Recording Journal Entries Charles Badurski organized a new company, CollegeCaps, Inc. The company operates a small store in an area mall and specializes in baseball caps with logos printed on them. Charles believes that his target market is college and high school students. You have been hired to record the transactions occurring in the first two weeks of operations. May 1 Issued 1,000 shares of stock to investors for $21 per share. May 1 Borrowed $35,000 from the bank to provide additional funding to begin operations; the note is due in two years. May 1 Paid $840 for the current month's rent and another $840 for next month's rent. May 1 Paid $1,680 for a one-year fire insurance policy (recorded as a prepaid expense). May 3 Purchased furniture and fixtures for the store for $10,500 on account. The amount is due within 30 days. May 4 Purchased a supply of The University of Texas, Southern Methodist University, and Michigan State University baseball caps for the store for $1,260 cash. May 5 Placed advertisements in local college newspapers for a total of $175 cash. May 9 Sold baseball caps totaling $280, half of which was charged on account. The cost of the baseball caps sold was $105. May 10 Made full payment for the furniture and fixtures purchased on account on May 3. May 14 Received $35 from a customer on account. Required: For each of the transactions, prepare journal entries. Date General Journal Debit Credit May 1 Cash 21,000 Contributed capital 21,000 May 1 Cash 35,000 Long-term debt 35,000 May 1 Rent expense 840 Prepaid rent 840 Cash 1,680 May 1 Prepaid insurance 1,680 Cash 1,680
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May 3 Furniture and fixtures 10,500 Accounts payable 10,500 May 4 Inventory 1,260 Cash 1,260 May 5 Advertising expense 175 Cash 175 May 9 Cash 140 Accounts receivable 140 Sales revenue 280 May 9 Cost of goods sold 105 Inventory 105 May 10 Accounts payable 10,500 Cash 10,500 May 14 Cash 35 Accounts receivable 35 P3-1 Recording Nonquantitative Journal Entries The following list includes a series of accounts for Choudhury Corporation that has been operating for three years. These accounts are listed and numbered for identification. Following the accounts is a series of transactions. For each transaction, indicate the account(s) that should be debited and credited by entering the appropriate account number(s) to the right of each transaction. If no journal entry is needed, use
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