Prepare journal entries to record the following transactions and events that occurred during the month
of January 2010.
On January 1, 2010, a new stockholder purchased 20,000 newly issued shares of ABC Company’s
$1 par value common stock for $200,000 cash.
On January 1, 2010, the ABC Company paid its insurance company $24,000 cash for a 12-month
comprehensive insurance policy.
On January 1, 2010, the ABC Company paid its landlord $15,000 cash for store rental for the
month of January.
On January 1, 2010, the ABC Company purchased additional Store fixtures for a total of $80,000.
ABC made a down payment of $10,000 cash and signed a 8% Note payable for the $70,000
The 8% Note payable is due in 2 years on December 31, 2011.
Interest is payable semi-
annually on June 30 and December 31.
During January of 2010, the ABC Company paid $50,000 cash to purchase Supplies.
During January of 2010, the ABC Company purchased 50,000 units of Merchandise inventory for
$1,225,000 on account (i.e., $24.50 per unit).
ABC Company does maintain detailed Purchase
During January of 2010, the ABC Company paid $30,000 cash for freight-in cost on merchandise
that was purchased during January (i.e., $0.60 per unit).