Question

Issued common stock to investors for $14,083 cash (example).

b. Purchased $878,418 of additional inventory on account.
c. Borrowed $11,000.
d. Sold $1,409,068 of products to customers on account; cost of the products sold was $852,316.
e. Paid cash dividends of $22,737. F. Purchased for cash $19,397 in additional property, plant, and equipment. G. Incurred $386,540 in selling expenses, paying three-fourths in cash and owing the rest on account. H. Earned $370 interest on investments, receiving 90 percent in cash. I. Incurred $1,395 in interest expense to be paid at the beginning of next year.

Answer 1

1. Cash........................................... DR $14083

To Common Stock............................................ $14083

(Being Cash received from sale of common stock to shareholders)

2. Merchandise Inventory.............DR $878418

To Accounts Payable.................................... $878418

(Being Inventory purchased on account)

3. Cash................................ DR $11000

To Long Term Debt.................................... $11000

(Being Cash Borrowed)

4. Accounts Receivable.................. DR $1409068

To Sales.................................................................... $1409068

(Being Sales made on Account)

Cost of Goods Sold.................... DR $852316

To Merchandise Inventory................................ $852316

(Being Cost of goods sold recognised against sales made)

Dividends Payable............................... DR $ 22737

To Cash............................................................. $22737

(Being Dividends Paid)

Property, Plant and Equipment....................DR $19397

To Cash.......................................................................$19397

(Being additional Property, Plant and Equipment purchased in cash)

Selling Expense.........................DR $386540

To Cash........................................................... $ 289905

To Accounts Payable..................................$96635

(Being Selling Expenses incurred in cash and on account)

Cash............................DR $333

Interest Recievable...................DR $37

To Interest Income..........................................$ 370

(Being Interest Received in Cash and partly receivable later)

Interest Expense....................... DR $1395

To Interest Payable.................................................... $1395

(Being Interest Expense Accrued).