Question

Owner invested $60,000 cash in the company along with equipment that had a $15,000 market value in exchange for its common stock. The company paid $1,500 cash for rent of office space for the month. The company purchased $10,000 of additional equipment on credit (payment due within 30 days). The company completed work for a client and immediately collected the $2,500 cash earned. The company completed work for a client and sent a bill for $8,000 to be received within 30 days. The company purchased additional equipment for $6,000 cash. The company paid an assistant $3,000 cash as wages for the month. The company collected $5,000 cash as a partial payment for the amount owed by the client in transaction e. The company paid $10,000 cash to settle the liability created in transaction c. The company paid $1,000 cash in dividends to the owner (sole shareholder).

Answer 1

Equipment 15,000 debit

Cash 60,000 debit

Common Stock 75,000 credit

--to record contribution from owner--

rent expense 1,500 debit

cash 1,500 credit

--to record rent expense for the period--

equipment 10,000 debit

account payable 10,000 credit

--purhcase of equipment on credit--

cash 2,500 debit

services revenue 2,500 credit

--to record revenue in cash--

account receivable 8,000 debit

services revenue 8,000 credit

--to record revenue in credit--

equipment 6,000 debit

cash 6,000 credit

--purchase of equipment in cash--

wages expense 3,000 debit

cash 3,000 credit

--payment of wages for the month--

cash 5,000 debit

account receivable 5,000 credit

--to record collection on accounts receivable--

account payable 10,000 debit

cash 10,000 credit

--to record payment of liability--

dividends 1,000 debit

cash 1,000 credit

--to record cash diviends--

Step-by-step explanation:

1) the common stock received will be the sum of the equipment and the cash.

Assets enters the account in debit and the common stock in credit

2)the expense will be debited and the assets given credited.

3) as it is not paying the equipment, there is a liaiblity, and account to pay

4) as the work is completed it generates revenue for the company

5) same as before, but without paymnet, we have an account to receive

6) another purchase of equipment this time, at cash

7) payment of wages expense

8) collection from the account receivable we reduce the receivable and increase our cash

9) payment of liability using cash

10) payment of cash dividends