Question

Journal Entry for a company ending April 30,2018 Transactions

1. 1/17/2018 Received a loan of $30,000 from the bank.

2. 1/28/2018 Paid $1,830 in cash to purchase display equipment for the car showroom

3. 04/14/2018 Puchased a building for office and retail space for $480,300. They paid 20% down in cash and signed a long-term mortgage note for the rest.

4. 3/17/2018 The company purchased a six month insurance policy and paid cash in advance of $4,960

5. 2/17/2018 Purchased car inventory on account for $87,900.

6. 2/19/2018 car sales recorded to a local car community, sold on account for $60,569.

7. 04/22/2018 Paid $90,000 of the Account Payable for the car inventory to the supplier.

8. 02/20/2018 The company received a cash payment of $20,900 from the local car community

9. 03/31/2018 Car sales in cash for February and March were $79,900

10. Cost of Goods Sold for the February and March sales (cash and credit) were $49,500

11. Salaries and wages expense for Feb and March combined was $27,000. Of this total, $20,000 was paid in cash and $7,000 will be paid in May.

12. 03/14/2018 The company records depreciation monthly. The building has a useful economic life of 40 years and the company uses the straight line depreciation method.

13. 02/ 25/ 2018 The company records depreciation monthly. The display equipment has a useful economic life of 10 years and the company uses the straight line depreciation method. 14. 4/01/2018 Insurance expense for Feb and March combined is 1/3 of the amount paid in advance

Answer 1

No.	Particulars	Debit	Credit
1.	By Cash A/C To Loan from Bank A/C (Being loan received from bank)	$ 30,000	$ 30,000
2.	By Equipment A/C To Cash A/C (Being display equipment purchased)	$ 1,830	$ 1,830
3.	By Building To Cash To Long term note Payable (Being building purchased)	$ 480,300	$ 96,060 $ 384,240
4.	By Prepaid Insurance To Cash (Being Insurance purchased)	$ 4,960	$ 4,960
5.	By Inventory To Accounts Payable (Being Car inventory purchased on account)	$ 87,900	$ 87,900
6.	By Accounts Receivable To Sales (Being sales made to Car Community)	$ 60,569	$ 60,569
7.	By Accounts Payable To Cash ( Being payment made to Accounts Payable)	$ 90,000	$ 90,000
8.	By Cash To Accounts Receivable (Being payment received from receivables)	$ 20,900	$ 20,900
9.	By Cash To Sales ( Being Car Sales in Cash recorded)	$ 79,900	$ 79,900
10.	By Cost of Goods Sold To Inventory ( Being Cost of Goods Sold recorded)	$ 49,500	$ 49,500
11.	By Salaries and Wages To Cash To Salaries and Wages Payable (Being Salary expense recorded)	$ 27,000	$ 20,000 $ 7,000
12.	By Depreciation- Building To Accumulated Depreciation- Building ( Being depreciation on building recorded)	$ 1,000.63	$ 1,000.63
13.	By Depreciation- Equipment To Accumulated Depreciation- Equipment ( Being depreciation on equipment recorded)	$ 45.75	$ 45.75
14.	By Insurance To Prepaid Insurance ( Being Insurance expense recorded)	$ 1,653.33	$ 1,653.33

Workings:

3. Cash down Payment = Cost of Building x 20%

= 480,300 x 20%

= 96,060

Long Term Note Payable = Cost of Building - Cash Payment

= 480,300 - 96,060

= 384,240

12. Depreciation per annum= (Cost - Salvage Value ) ÷ Useful Life

= (480,300 - 0) ÷ 40

= 12,007.50

Depreciation Expense = 12,007.50 x 1/12

= $ 1,000.63

13. Depreciation per annum = (Cost - Salvage Value) ÷ Useful life

= (1,830 - 0) ÷ 10

= 183

Depreciation Expense = 183 x 3/12

= $ 45.75

14. Insurance Expense = Prepaid insurance x 1/3

= 4,960 x 1/3

= $ 1,653.33