Question

a. Received $60,000 cash from the investors who organized Down, Inc. b. Borrowed $20,000 cash and signed a note due in two years. c. Ordered equipment costing $16,000. d. Purchased $9,000 in equipment, paying $2,000 in cash and signing a six-month note for the balance. e. Received the equipment ordered in (C), paid for half of it, and put the rest on account. 2. Prepare journal entries for each transaction. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Answer 1

Explanation:

The journal entries are shown below:

a. Cash A/c Dr $60,000

       To Common stock A/c $60,000

(Being the cash is received)

b. Cash A/c Dr $20,000

       To Long term payable A/c $20,000

(Being the borrowed cash is recorded)

c. No Journal Entry Required

d. Equipment A/c Dr $9,000

             To  Cash A/c Dr $2,000

             To Short-term note payable A/c $7,000

(Being the equipment is purchased)

e. Equipment A/c Dr $16,000

             To  Cash A/c Dr $8,000

             To Account payable  A/c $8,000

(Being the equipment is purchased)