Question

Prepare journal entries for each transaction listed below. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) a. Sales on account were $940 and related cost of goods sold was $520. b. Issued 2,000 shares of $1 par value stock for $70,000 cash.

Answer 1

a.) Dr Accounts receivable $940

Cr Revenue $940

Dr Cost of Sales $520

Cr Inventory $520

b.) Dr Cash $70000

Cr Share Premium $68,000

Cr Share Capital $2000

Step-by-step explanation:

a.) The sales were on account so the debit would be to a receivable account

b.) The issues shares would have a face value pf $1 X 2000 = $2000

A share premium account would have to be created, a share premium is the amount a company receives for its stock in excess of its face value

A face value is described as the nominal value as stated by the issue , it can basically be described as the original cost of the stock