Question

The following transactions occurred during March 2021 for the Wainwright Corporation. The company owns and operates a wholesale warehouse.

1. Issued 50,000 shares of common stock in exchange for $500,000 in cash.
2. Purchased equipment at a cost of $60,000. $20,000 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 $118,000. The company uses the perpetual inventory system.
4. Credit sales for the month totaled $220,000. The cost of the goods sold was $90,000.
5. Paid $7,000 in rent on the warehouse building for the month of March.
6. Paid $8,000 to an insurance company for fire and liability insurance for a one-year period beginning April 1, 2021.
7. Paid $90,000 on account for the merchandise purchased in 3.
8. Collected $75,000 from customers on account.
9. Recorded depreciation expense of $3,000 for the month on the equipment.

Post the above transactions to the below T-accounts. Assume that the opening balances in each of the accounts is zero. Prepare a trial balance from the ending account balances.

Answer 1

. Th 2000 Purchase. Alcor 90,000 To Cash CBeing stock purchasee Cash Alodr 75000 To Debtors 75000 e being Debtoos Realised) Depocuation Alo Dr 3000 'To Equipment CBeing Equipment Deprecateel) TI) 3000 @ Debit Creelet- | 500,000 157000 40,000 Trial Balance - Particulars Shares Equipment Bills Payable Inventories. Debtors Rent Insurance I Cash Profit on Sale 118000 145.000 7000 8000 3.32,000 127,000 6,67,000 6,67,000

to Debit Credit o o con 20.000 40.000 2 Journal Entries ca Cash AIC, DY S00,000 -To Issue el Shares_ f. 50,000 X $20) ott CBeing Sharee issued) (b) Equipment Alody 60,000 3 To Cash To Bills payable Cbeing equipment Purchased) o Inventones Alo Dr 418,000 1. To Cash - 1,18,000 Being inventories Purchased) di Debtors Ala Dr___280,000 To sales 220,000 | CBeing Credef Sale Recorded) les COGS Alcor 90,000 To Finshe good, Ake CBeing Stock framstered) Rent Alcor 1000 To Cash 7000 (Being Rent Paid) (g Insurance Premium Alo Dr 8000 Tocash | CBeing Insurance Premium paid Q0.00020.000