Question

On January 1, 2018, the general ledger of Grand Finale Fireworks includes the following account balances:

Account Debit Credit
Cash $ 44,500
Accounts Receivable 48,100
Supplies 9,300
Equipment 82,000
Accumulated Depreciation $ 10,800
Accounts Payable 16,400
Common Stock, $1 par value 18,000
Additional Paid-in Capital 98,000
Retained Earnings 40,700
Totals $183,900 $183,900

During January 2018, the following transactions occur:January 2 Issue an additional 2,000 shares of $1 par value common stock for $40,000.January 9 Provide services to customers on account, $19,500.January 10 Purchase additional supplies on account, $6,700.January 12 Repurchase 1,200 shares of treasury stock for $21 per share.January 15 Pay cash on accounts payable, $18,300.January 21 Provide services to customers for cash, $50,900.January 22 Receive cash on accounts receivable, $18,400.January 29 Declare a cash dividend of $0.30 per share to all shares outstanding on January 29. The dividend is payable on February 15. (Hint: Grand Finale Fireworks had 18,000 shares outstanding on January 1, 2018 and dividends are not paid on treasury stock.) January 30 Reissue 600 shares of treasury stock for $23 per share.January 31 Pay cash for salaries during January, $43,800.Record each of the transactions listed above.

Answer 1

Answer and Explanation:

The Journal entry is shown below:-

1. Cash Dr, $40,000

To Common Stock $2,000

To Additional Paid in capital $38,000

(Being issue of common stock is recorded)

2. Accounts Receivable Dr, $19,500

To Service revenue $19,500

(Being Service revenue is recorded)

3. Supplies Dr, $6,700

To Accounts payable $6,700

(Being additional supplies on account is recorded)

4. Treasury stock Dr, $25,200

To Cash $25,200

(1,200 × $21)

(Being purchase of treasury stock is recorded)

5. Accounts payable Dr, $18,300

To Cash $18,300

(Being accounts payable is recorded)

6. Cash Dr, $50,900

To Service revenue $50,900

(Being service provided for cash is recorded)

7. Cash Dr, $18,400

To Accounts Receivable $18,400

(Being cash is recorded)

8. Retained earnings Dr, $5,040

(18,000 - 1,200) × $0.30

To Dividend payable $5,040

(Being dividend declared is recorded)

9. Cash Dr, $13,800

(600 × $23)

To Treasury stock $12,600

To Additional paid-in-capital $1,200

(Being treasury stock is recorded)

10. Salaries expense Dr, $43,800

To Cash $43,800

(Being Cash is recorded)