Question

Green Wave Company plans to own and operate a storage rental facility. For the first month of operations,the company has the following transactions.1. Issue 10,000 shares of common stock in exchange for $32,000 in cash.2. Purchase land for $19,000. A note payable is signed for the full amount.3. Purchase storage container equipment for $8,000 cash.4. Hire three employees for $2,000 per month.5. Receive cash of $12,000 in rental fees for the current month.6. Purchase office supplies for $2,000 on account.7. Pay employees $6,000 for the first month's salaries.Required:Record each transaction. Green Wave uses the following accounts: Cash, Supplies, Land, Equipment,Common Stock, Accounts Payable, Notes Payable, Service Revenue, and Salaries Expense. (Leaveno cells blank. If no entry is required, select "No journal entry required" in the account fieldand zero (0) in the amount field. Omit the "$" sign in your response.

Answer 1

Following would be the journal entries for Green Wave Company:

1. Issue of common stock for cash

Cash A/C Dr. $32,000

To Common Stock $32,000

(Being 10,000 shares of common stock issued at $3.2 per share and cash received)

2. Purchase of Land against note payable

Land A/C Dr. $19,000

To Notes Payable A/C $19,000

(Being land purchased and a signed note being issued against it)

3. Purchase of Storage Container Equipment for Cash

Equipment A/C Dr.$8,000

To Cash A/C $8,000

(Being equipment i.e storage container purchased for cash)

4. Hired three employees for $2000 per month

NO JOURNAL ENTRY REQUIRED Dr. $0

$0

5. Received cash of $12000 as rental fees

Cash A/C Dr. $12,000

To Service Revenue A/C $12,000

(Being cash received in the form of rental fee)

6. Purchase office supplies for $2,000 on account

Supplies A/C Dr. $2,000

To Accounts Payable A/C $2,000

(Being office supplies purchased on credit)

7. Pay employees $6,000 for the first month's salaries

Salaries Expense A/C Dr.$6,000

To Cash A/C $6,000

(Being monthly salaries paid in cash)