Question

f. Purchased a flat-screen TV for Smith's home. g. Paid Smith a cash dividend of $4,000. h. Purchased office supplies on account for $1,200. i. Borrowed $62,000 from the bank for use in the business. j. Received $12,000 cash and issued stock to a stockholder.

Answer 1

Seeing the problem we have, it's understood we have to pass journal entries.

Step-by-step explanation:

In the books of Smith Ltd.

(f) Drawings A/C Dr.

To Purchases A/C

(TV purchased for Smith's personal use, assuming it as a credit purchase)

(g) Dividends payable A/C Dr. $ 4,000

To Cash A/C $ 4,000

(Cash dividend paid to Smith)

(h) Purchases A/C Dr. $ 1,200

To Creditor's A/C $ 1,200

(Office supplies purchased on account i.e. on credit)

(i) Bank A/C Dr. $ 62,000

To Bank loan A/C $ 62,000

(Bank borrowings made for use in the business)

(j) Bank A/C Dr. $ 12,000

To share application and allotment A/C $ 12,000

(Shares issued to a stockholder)

Total $ 79,200 $ 79,200