Question

MERCHANDISING ACOUNTING Joe Blink opened Blink Corporation. It has link Corporation. It has issued 20,000 shares of $4 par value common stock. It authorized 900,000 S od 900,000 share. The corporation is a merchandising business. Blink ventory system. Also Blink provides a 2-year warranty with one of its products which was first sold in October. Blink Corporation Trial Balance periodic inventory system September 30 Cr. Cash Dr. $ 54,000 14,000 Inventory Land 45,000 Plant Building 500,000 Accumulated Depreciation-plant Equipment 200,000 Accumulated depreciation-equipment 4,000 Common stock ($4 par) Retained earnings 80,000 341 000 $625,000 Totals $625,000 are iournal entries to record the following merchandising transactions 1. Issued 412,000 shares of $4 par value common stock for $36 ner share at 1. Paid three months' rent on a lease rental contract, $5.800. 1 Issued 12,000 shares $4 par value of common stock to attorney 00 shares $4 par value of common stock to attorneys in payment of their $60,000 for services rendered in helping the company organize. Durchased office equipment on account from Office Station Co. $2,000.

Answer 1

1. cash a/c dr. 14,832,000

capital a/c cr. 1,648,000

premium on shares issued a/c cr. 13,184,000

1. Prepaid Renta/c dr. 5,800

Cash a/c cr. 5,800

1. Legal Fees a/c dr. 60,000

capital a/c cr. 48,000

premium on shares issued a/c cr. 12,000

1. Equipment a/c dr. 2,000

Office Station a/c cr. 2,000

1. Land a/c dr. 65, 816

Interest payable on Notes payable a/c dr. 34,184

Notes Payable a/c cr. 100,000

1. Loss on machine a/c dr. 2,000

machine a/c cr. 2,000

(due to commercial substance, recording at FMV)

A/c depreciation a/c dr. 4,000

New model a/c dr. 16,000

machine a/c cr. 10,000

trade in allowance cr. 9,000

Cash a/c cr. 1,000

( writng off old machine and recording new model)

1. Purchases a/c dr. 6,000

accounts payable a/c 6,000

1. Accounts Receivable a/c Dr. 11,500

Sales a/c Cr. 800

Gain on sales a/c cr. 10,700

2. Cash a/ Dr. 71,776

Notes Payable a/c cr. 70,000

Premium on issue of N/P a/c cr. 1,776

2. Land a/c dr. 170,000

Contribution Reserve a/c cr. 170,000

2. Purchases a/c dr. 125

Cash a/c cr. 125

(inward freight is included in cost of inventory)

3. Notes receivable a/c dr. 1,500

accounts receivable a/c cr. 1,500

4. Petty cash fund a/c dr. 200

cash a/c cr. 200