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Intermediate Accounting 10th Edition

Intermediate Accounting (10th Edition)

Book Edition10th Edition
Author(s)Spiceland, Nelson, Thomas
ISBN9781260310177
PublisherMcGraw-Hill, Inc.
SubjectAccounting

Chapter 2, The Accounting Processing Cycle, Concept Review Exercise, Exercise 1

Page 62

Explanation

  • Journal entry is the process using which the financial transactions that are related to the business are recorded initially.

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  • In the first journal entry, cash account is debited and common stock account is credited with $50,0000 to record the issuance of common stock.

 

  • In the second journal entry, equipment account is debited and cash account is credited with $20,000 to record entity purchased equipment.

 

  • In the third journal entry, prepaid rent account is debited and cash account is credited with $6,000 to record entity paid rent in advance.

 

  • In the fourth journal entry, inventory account is debited and accounts payable is credited with $38,000 to record purchased  merchandise on account.

 

  • In the fifth journal entry, cash account is debited and notes payable account is credited with $30,000 to record entity borrowing cash and signing a note.

 

  • In the sixth journal entry, accounts receivable is debited and sales revenue is credited with$40,000 to record sales merchandise on account.

 

  • In the seventh journal entry, cost of goods sold is debited and inventory account is credited with $22,000 to record cost of goods sold.

 

  • In the eight journal entry, cash account is debited and accounts receivable is credited with $15,000 to record cash collected on account.

 

  • In the ninth journal entry, accounts payable is debited and cash account is credited with $20,000 to record payment to suppliers on account.

 

  • In the tenth journal entry, salaries expense account is debited and cash account is credited with $7,000 to record entity paid salaries to employees.

 

  • In the eleventh journal entry, utilities expense account is debited and accounts payable is credited with $2,000 to record utilities expenses made on account.

 

  • In the twelfth journal entry, notes receivable account is debited and cash account is credited with $20,000 to record acceptance of notes receivable.

 

  • In the thirteenth journal entry, dividend account is debited and cash account is credited with $1,000 to record entity paid dividends.

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