Question

The following transactions occurred during the month of June 2018 for the Stridewell Corporation. The company owns and operates a retail shoe store

1. Issued 115,000 shares of common stock in exchange for $575,000 cash.
2. Purchased furniture and fixtures at a cost of $95,000. $38,000 was paid in cash and a note payable was signed for the balance owed
3. Purchased inventory on account at a cost of $230,000. The company uses the perpetual inventory system.
4. Credit sales for the month totaled $391,000. The cost of the goods sold was $195,500
5. Paid $5,000 in rent on the store building for the month of June
6. Paid $2,640 to an insurance company for fire and liability insurance for a one-year period beginning June 1, 2018
7. Paid $166,175 on account for the merchandise purchased in 3
8. Collected $78,200 from customers on account.
9. Paid shareholders a cash dividend of $5,750
10. Recorded depreciation expense of $1,900 for the month on the furniture and fixtures
11. Recorded the amount of prepaid insurance that expired for the month.
Required
Prepare journal entries to record each of the transactions and events listed above. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list View journal entry worksheet No Transaction General Journal Debit Credit 01 Cash 575,000 Common stock 575,000

Answer 1

The net profit from the purchase of 1000 shares of Nike stock is $5,260. The net profit from the purchase of 800 shares of Panda Express stock is -$300. The net profit from the purchase of 1200 shares of Wal Mart stock is $12,312.

Step-by-step explanation:

1. The net profit from the purchase of 1000 shares of Nike stock can be calculated as follows:
   Cost of shares = 1000 x $24.50 = $24,500
   Current market value of shares = 1000 x $39.75 = $39,750
   Transaction cost = 1000 x $9.99 = $9,990
   Net profit = (Current market value - Cost of shares) - Transaction cost
   Net profit = ($39,750 - $24,500) - $9,990 = $5,260
2. The net profit from the purchase of 800 shares of Panda Express stock can be calculated as follows:
   Cost of shares = 800 x $13.50 = $10,800
   Current market value of shares = 800 x $23.25 = $18,600
   Transaction cost = 800 x $10 = $8,000
   Net profit = (Current market value - Cost of shares) - Transaction cost
   Net profit = ($18,600 - $10,800) - $8,000 = -$300
3. The net profit from the purchase of 1200 shares of Wal Mart stock can be calculated as follows:
   Cost of shares = 1200 x $35.50 = $42,600
   Current market value of shares = 1200 x $58.75 = $70,500
   Transaction cost = 1200 x $12.99 = $15,588
   Net profit = (Current market value - Cost of shares) - Transaction cost
   Net profit = ($70,500 - $42,600) - $15,588 = $12,312

Answer 2

See the journal entries below.

Step-by-step explanation:

Tr. General Journal Dr ($) Cr ($)

1. Cash 575,000

Common stock 575,000

(To record common stock issued for cash.)

2. Furniture and fixtures 95,000

Cash 38,000

Note payable 57,000

(To record purchase of furniture and fixtures.)

3. Merchandise inventory 230,000

Account payable 230,00

(To record inventory purchased on account.)

4a. Account receivable 391,000

Sales 391,00

(To record credit sales).

4b. Cost of goods sold 195,500

Merchandise inventory 195,000

(To record cost of inventory sold.)

5. Rent expenses 5,000

Cash 5,000

(To record interest paid for June.)

6. Prepaid insurance 2,640

Cash 2,640

(To record prepaid insurance.)

7. Account payable 166,175

Cash 166,175

(To record payment for merchandise inventory bought on account.)

8. Cash 78,200

Account receivable 78,200

(To record cash received from customer.)

9. Dividend paid 5,750

Cash 5,750

(To record cash dividend paid.)

10. Depreciation expenses 1,900

Accumulated Dep. - F $ F 1,900

(To record record depreciation expenses for Furniture & F.)

11. Insurance expenses (2,640 / 12) 220

Prepaid insurance 220

(To record insurance expenses for the month.)