Question

How to record the journal entries for these 7 questions

(1) Jenny issues shares of $1 par common stock for cash.  

(2) She issues shares of $100 par 5% cumulative preferred stock for cash.  

(3) She issues 5 year 10% coupon bonds for cash and receives 93% of the face value of the bonds. Each bond has a $1,000 face value. The bonds pay interest once per year beginning December 31st 2019. The market rate of interest for these bonds (yield) was 12%.

(4) On January 2nd, Jenny purchased a delivery van for cash. Jenny estimates that the business will use the van for 8 years and that it will have a resale value after 8 years for 30% of the purchase price. In addition to the purchase price of the van, Jenny had to pay $1,000 for tax and delivery charges.

(5) Also on January 2nd, Jenny signed a three year lease on retail space at the local mall. The rent on the retail space is normally $1,100 per month. However, the landlord offers a discount if tenants prepay the rent. Jenny pays $36,000 in cash for three years of rent ($1,000 per month).   

(6) In her final transaction for January 2nd, Jenny purchase office supplies on account.  

(7) On January 3rd, Jenny purchased boomerangs from a boomerang factory for cash.

E Quantity Price 6000 141 282 1 44 Description 1 Sell common stock 2 Sell preferred stock 3 Issue Bond 4 Purchase Price of Van 5 Pay 3 years of rent 6 Purchase officce Supplies 7 Purchase inventory 8 Sell boomerangs 9 pay for office supplies 10 Receive payment for sale 11 Purchase more inventory 12 Actual Repair boomerangs 13 Sell additional boomerangs 14 Supplies inventory ending 15 Estimated bad debt 1000 846 642 1000 257 1607 Quantity X Price 42 252000 105 14805 930 262260 17700 17700 12000 36000 1000 37224 180 115560 1000 180 46260 45 72315 27 756 188 315652 200 500 500 28 1679 200 1

Answer 1

See below the Journal entries for the question.

JE No.	Account Name	Dr.	Cr.
1	Cash and Bank	252,000.00
	Common Stock		252,000.00
2	Cash and Bank	14,805.00
	5% Cumulative preference stock		14,100.00
	Share Premium		705.00
3	Cash and Bank	262,260.00
	Discount on Issuance of Bond	19,740.00
	10% Coupon Bonds		282,000.00
4	Motor Vehicle	18,700.00
	Cash and Bank		18,700.00
	(Capitalise the cost of delivery with Vehicle)
5	Depreciation	1,673.75
	Accumulated depreciation		1,673.75
	(=18700-17700*30%)/8)
6	Retail Rent	1,000.00
	Prepaid Rent	35,000.00
	Cash and Bank		36,000.00
7	Office Supplies	1,000.00
	Sundry Creditors		1,000.00
8	Boomerang Inventory	37,224.00
	Cash and Bank		37,224.00