Question

he following are the transactions of Spotlighter, Inc., for the month of January: a. Borrowed $4,940 from a local bank on a note due in six months. b. Received $5,630 cash from investors and issued common stock to them. c. Purchased $3,000 in equipment, paying $1,200 cash and promising the rest on a note due in one year. d. Paid $1,300 cash for supplies. e. Bought and received $1,700 of supplies on account. Prepare journal entries for each transaction. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Answer 1

Answer:

a.

(A) Cash +4,940

(L) Notes payable (short-term) +4,940

b.

(A) Cash +5,630

(S) Common Stock +5,630

c.

(A) Cash -1,200

(A) Equipment +3,000

(L) Notes payable (short-term) +1,800

d.

(A) Cash -1,300

(A) Supplies +1,300

e.

(A) Supplies +1,700

(L) Accounts payable +1,700

Explanation:

(A) = Assets  

(L) = Liabilities

(S) = Stockholders' Equity

(A) = (L) + (S)

Transaction a.

(A) Cash +4,940

(L) Notes payable (short-term) +4,940

Transaction b.

(A) Cash +5,630

(S) Common Stock +5,630

Transaction c.

(A) Cash -1,200

(A) Equipment +3,000

(L) Notes payable (short-term) +1,800

Transaction d.

(A) Cash -1,300

(A) Supplies +1,300

Transaction e.

(A) Supplies +1,700

(L) Accounts payable +1,700

Hope this hepls!