Question

Maquoketa Services was formed on May 1, 2017. The following transactions took place during the first month.
Transactions on May 1:
1. Jay BradFord invested $40,000 cash in the company, as its sole owner.
2. Hired two employees to work in the warehouse. They will each be paid a salary of $3,050 per month.
3. Signed a 2-year rental agreement on a warehouse; paid $24,000 cash in advance for the first year.
4. Purchased furniture and equipment costing $30,000. A cash payment of $10,000 was made immediately; the remainder will be paid in 6 months.
5. Paid $1,800 cash for a one-year insurance policy on the furniture and equipment.
Transactions during the remainder of the month:
6. Purchased basic office supplies for $420 cash.
7. Purchased more office supplies for $1,500 on account.
8. Total revenues earned were $20,000—$8,000 cash and $12,000 on account.
9. Paid $400 to suppliers for accounts payable due.
10. Received $3,000 from customers in payment of accounts receivable.
11. Received utility bills in the amount of $380, to be paid next month.
12. Paid the monthly salaries of the two employees, totaling $6,100.
Prepare journal entries to record each of the events listed. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Answer 1

Answer:

1. Jay BradFord invested $40,000 cash in the company, as its sole owner.

Account                     Debit          Credit

Cash                          $40,000

Capital                                          $40,000

2. Hired two employees to work in the warehouse. They will each be paid a salary of $3,050 per month.

Account                     Debit          Credit

Wage Expense         $3,050

Wages Payable                           $3,050

3. Signed a 2-year rental agreement on a warehouse; paid $24,000 cash in advance for the first year.

Account                     Debit          Credit

Prepaid Rent             $24,000

Cash                                              $24,000

4. Purchased furniture and equipment costing $30,000. A cash payment of $10,000 was made immediately; the remainder will be paid in 6 months.

Account                                Debit          Credit

Furniture and Equipment   $30,000

Cash                                                        $10,000

Accounts Payable                                  $10,000

5. Paid $1,800 cash for a one-year insurance policy on the furniture and equipment.

Account                                Debit          Credit

Prepaid Insurance               $1,800

Cash                                                        $1,800

6. Purchased basic office supplies for $420 cash.

Account                                Debit          Credit

Office supplies                    $420

Cash                                                         $420

7. Purchased more office supplies for $1,500 on account.

Account                                Debit          Credit

Supplies                               $1,500

Accounts Payable                                   $1,500

8. Total revenues earned were $20,000—$8,000 cash and $12,000 on account.

Account                                Debit          Credit

Revenue                                                  $20,000

Cash                                     $8,000

Accounts Receivable          $12,000

9. Paid $400 to suppliers for accounts payable due.

Account                                Debit          Credit

Accounts Payable                $400

Cash                                                         $400

10. Received $3,000 from customers in payment of accounts receivable.

Account                                Debit          Credit

Accounts Receivable                              $3,000

Cash                                     $3,000

11. Received utility bills in the amount of $380, to be paid next month.    

Account                                Debit          Credit

Utility Expense                    $380

Accounts Payable                                   $380

12. Paid the monthly salaries of the two employees, totaling $6,100.

Account                     Debit          Credit

Wage Expense                            $3,050

Wages Payable         $3,050