Question

On Jamary 1, Peter incorporates Peter Stores, Inc., a DVD store. He contributes $25,000 cash. Peter is the sole owner. 2. Oa January 1, the corporation borrows $12,500 from a bank. 3. On Jamuary 1, the business buys inventory (merchandize for sale) in the amount of $5,000 paying cash 4. On January 1, the business purchases a three-year insurance policy for $1 224 paying cash The company also records the following transactions in January: 5. The company buys inventory for $5,000, agreeing to pay within 60 days. 6. The company purchases land for $24,000 by paying cash $6,000 and taking a 10-year mortgag for $18,000 (assume zero interest rate). The company sells half of this land for $12,000 It receives $3,000 cash and the buyer assumes 8. Peter receives an acquisition offer of $53,000 for the business; he rejects the offer, because it is 9 Peter withdraws $1,000 cash from the store's bank account for his wage (that is Peter works for 10. Peter takes inventory costing $750 from the store for his personal use (assume this is a loan from $9,000 of the mortgage; that is, the company is no responsible for this half. evident that the market value of the store's assets is $56,000. the company and the amount of $1,000 is his wage) the corporation to Peter, thus, Peter is obliged to retum it) by the business is identical in value. 11. Peter finds out that the individual that purchased the land sold it for $14,000. The p 12. The store pays off $6,000 of its mortgage (assume zero interest rate). 13. Peter sells one-third of the stock he owns in Peter Stores, Inc. for $11,000 The company sells on credit inventory that costs $5,000 for $9.000 Question Peter asks you to record the above-mentioned accounting transactions and prepare Peter Stores. Inc.'s income statement for January and balance sheet as of January 31

Answer 1

Journal entries

		Debit (USD)	Credit (USD)
1.	Cash	25,000
	Capital		25,000
2.	Cash	12,500
	Bank loan		12,500
3.	Inventory	5,000
	Cash		5,000
4.	Insurance policy	1,224
	Cash		1,224
5.	Inventory	5,000
	Supplier		5,000
6.	Land	24,000
	Cash		6,000
	Mortgage		18,000
7.	Mortgage	9,000
	Cash	3,000
	Land		12,000
8.	No entry
9.	Wages	1,000
	Cash		1,000
10.	Peter's loan a/c	750
	Inventory		750
11.	no entry
12.	Mortgage	6,000
	Cash		6,000
13.	no entry in Peter Inc books
14.	Cost of goods sold	5,000
	Inventory		5,000
	Debtors	9,000
	Sales		9,000