Question

The following transactions occurred during March 2021 for the Wainwright Corporation. The company owns and operates a wholesale warehouse. 1. Issued 38,000 shares of non-par common stock in exchange for $380,000 in cash. 2. Purchased equipment at a cost of $56,000. $14,000 cash was paid and a notes payable to the seller was signed for the balance owed. 3. Purchased inventory on account at a cost of $116,000. The company uses the perpetual inventory system. 4. Credit sales for the month totaled $160,000. The cost of the goods sold was $96,000. 5. Paid $5,250 in rent on the warehouse building for the month of March. 6. Paid $6,400 to an insurance company for fire and liability insurance for a one-year period beginning April 1, 2021. 7. Paid $96,000 on account for the merchandise purchased in 3. 8. Collected $72,000 from customers on account. 9. Recorded depreciation expense of $1,400 for the month on the equipment.

Answer 1

Transaction	General Journal	Debit	Credit
1	Cash	$380,000
	Common stock		$380,000
2	Equipment	$56,000
	Cash		$14,000
	Note payable		$42,000
3	Inventory	$116,000
	Accounts payable		$116,000
	( To record inventory purchase)
4	Accounts receivable	$160,000
	Sales		$160,000
	( To record credit sales)
	Cost of goods sold	$96,000
	Inventory		$96,000
	( To record cost of goods sold)
5	Rent expense	$5,250
	Cash		$5,250
	( To record rent expense)
6	Prepaid insurance	$6,400
	Cash		$6,400
	( To record prepaid insurance)
7	Accounts payable	$96,000
	Cash		$96,000
	( To record merchandise payment)
8	Cash	$72,000
	Accounts receivable		$72,000
	( To record amount received from customer)
9	Depreciation expense	$1,400
	Accumulated depreciation - equipment		$1,400
	( To record depreciation expense )

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