Question

Perpetual system LO 4-1 Milo Clothing experienced the following events during Year 1, its first year of operation: Acquired $15,000 cash from the issue of common stock. Purchased inventory for $6,900 cash. Sold inventory costing $4,140 for $7,038 cash. Paid $700 for advertising expense. Required a. Record the general journal entries for the preceding transactions. b. Post each of the entries to T-accounts. c. Prepare a trial balance to prove the equality of debits and credits.

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Exercise 4-4A Recording inventory transactions in the general journal and posting entries to T-accounts: Perpetual system LO 4-1

Milo Clothing experienced the following events during Year 1, its first year of operation:

1. Acquired $15,000 cash from the issue of common stock.
2. Purchased inventory for $6,900 cash.
3. Sold inventory costing $4,140 for $7,038 cash.
4. Paid $700 for advertising expenses.

Required
b. Post each of the entries to T-accounts

Answer 1

Solution:

Cash A/c

Particulars	Amount	Particulars	Amount
Beg. Balance		By Inventory A/c	6,900
To Capital A/c	15,000	By Advertisement Expenses A/c	700
To Sales A/c	7038	End Balance	14438

Capital A/c

Particulars	Amount	Particulars	Amount
		Beg. Balance
End Balance		By Cash A/c	15,000

Sales A/c

Particulars	Amount	Particulars	Amount
		Beg. Balance
End Balance		By Cash A/c	7038

Inventory A/c

Particulars	Amount	Particulars	Amount
Beg Balance
To Cash A/c	6900	End Balance

Advertisement Expenses A/c

Particulars	Amount	Particulars	Amount
Beg Balance
To Cash A/c	700	End Balance