Question

Three former college classmates decided to open a store near campus to sell wireless equipment to students. They created a public company, The Wire, and issued stock to interested investors. They plan on creating monthly financial statements.

Required: Several transactions occurred in March. Each is described separately in this folder. For each transaction, indicate the accounts for The Wire that are affected, whether they increase or decrease, and the amount of the increase or decrease.

This is the drop down for the practice problems to indicate what value is for which description

Cash, Accounts receivable, inventory, prepaid rent, fixtures and equipment, accounts payable, interest payable, wages payable, notes payable, paid in capital, retained earnings

Transaction 5
Sales were $60,000. Cost of merchandise sold was 65% of sales. 80% of sales were on open account. [Note:Record the complete entry for the sales first and the complete entry for the expenses second]

Answer 1

5
Account	Dollar amount
Cash	12000
Accounts Receivable	48000	=60000*80%
Retained earnings	60000
Inventory	-39000	=60000*65%
Retained earnings	-39000
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