Question

The following transactions occurred during January 2021:

Jan. 1 Sold merchandise for cash, $2,600. The cost of the merchandise was $1,100. The company uses the perpetual inventory system.
2 Purchased equipment on account for $4,600 from the Strong Company.
4 Received a $200 invoice from the local newspaper requesting payment for an advertisement that Whitlow placed in the paper on January 2.
8 Sold merchandise on account for $4,800. The cost of the merchandise was $2,600.
10 Purchased merchandise on account for $9,400.
13 Purchased equipment for cash, $800.
16 Paid the entire amount due to the Strong Company.
18 Received $3,800 from customers on account.
20 Paid $800 to the owner of the building for January’s rent.
30 Paid employees $2,800 for salaries and wages for the month of January.
31 Paid a cash dividend of $1,000 to shareholders.

Prepare journal entries.

Answer 1

Answer and Explanation:

According to the scenario, journal entry of the given data are as follow:-

Journal Entry

On Jan 1  

Cash A/c      Dr.   $2,600

   To Sales revenue A/c     $2600

(Being the sales is recorded)

  Cost of goods sold A/c     Dr.   $1,100

   To Merchandise Inventory A/c      $1,100

(Being the cost of goods sold is recorded)

On Jan 2  

Equipment A/c         Dr.  $4,600

   To Accounts payable A/c     $4,600

(Being the purchase of equipment on account is recorded)

On Jan 4

  Advertisement expenses A/c      Dr.   $200

   To Accounts payable A/c     $200

(Being the advertising expense is recorded)

On Jan 8

Accounts receivable A/c     Dr.   $4,800

    To Sales revenue A/c     $4,800

(Being the sales is recorded)

Cost of goods sold A/c      Dr.    $2,600

   To Merchandise  Inventory A/c      $2,600

(Being the cost of goods sold)

On Jan 10

Merchandise  Inventory A/c       Dr.    $9,400

   To Accounts payable A/c    $9,400

(Being the purchase of merchandise on account)

On Jan 13

Equipment A/c         Dr.    $800

     To cash A/c      $800

(Being purchase of equipment is recorded)

On Jan 16

 Accounts payable A/c         Dr.   $4,600

      To Cash A/c      $4,600

(Being the cash paid is recorded)

On Jan 18  

Cash A/c          Dr.   $3,800

       To Accounts receivable A/c    $3,800

(Being the cash received is recorded)

On Jan 20

Rent expense A/c          Dr.   $800

       To cash A/c      $800

(Being the rent expense is recorded)

On Jan 30

Salaries and wages expense A/c    Dr.  $2,800

        To cash A/c      $2,800

(Being the salaries and wages expense is recorded)

On Jan 31

Dividends A/c            Dr.  $1,000  

         To cash A/c      $1,000

(Being the cash dividend is paid)