The following transactions occurred during March 2018 for the Wainwright Corpora

Question

The following transactions occurred during March 2018 for the Wainwright Corporation. The company owns and operates a wholesale warehouse. Issued 31,000 shares of common stock in exchange for $310,000 in cash. Purchased equipment at a cost of $41,000. $10,500 cash was paid and a note payable was signed for the balance owed. Purchased inventory on account at a cost of $80,000. The company uses the perpetual inventory system. Credit sales for the month totaled $125,000. The cost of the goods sold was $71,000. Paid $5,100 in rent on the warehouse building for the month of March. Paid $6,100 to an insurance company for fire and liability insurance for a one-year period beginning April 1, 2018. Paid $71,000 on account for the merchandise purchased in 3. Collected $56,000 from customers on account. Recorded depreciation expense of $1,100 for the month on the equipment. Post the above transactions to the below T-accounts. Assume that the opening balances in each of the accounts is zero. Prepare a trial balance from the ending account balances.

Explanation / Answer

Trial Balance Particulars Dr Cr Common Stock 310000 Cash A/c 273300 Equipment A/c 39900 Bills Payable A/c 30500 Purchases A/c 80000 Accounts Payable A/c 9000 Sales A/c 125000 Accounts Receivables A/c 69000 Prepaid Insurance A/c 6100 Depreciation exp 1100 Rent 5100 Total 474500 474500 In the books of Wainwright Corporation T - Account Dr. Common Stock A/c Cr. Date Particulars Amount (in $) Date Particulars Amount (in $) Mar-18 Cash A/c 310000 31-Mar-18 balance c/d 310000 310000 310000 Dr. Cash A/c Cr. Date Particulars Amount (in $) Date Particulars Amount (in $) Mar-18 Common stock (FV $10/-) 310000 Mar-18 Equipment 10500 Mar-18 Rent 5100 Mar-18 Prepaid Insurance 6100 Mar-18 Accounts Payables 71000 Mar-18 Accounts Receivable 56000 31-Mar-18 balance c/d 273300 366000 366000 Dr. Equipment A/c Cr. Date Particulars Amount (in $) Date Particulars Amount (in $) Mar-18 Cash 10500 Mar-18 Bills Payable 30500 Mar-18 Depriciation 1100 31-Mar-18 balance c/d 39900 41000 41000 Dr. Bills Payable A/c Cr. Date Particulars Amount (in $) Date Particulars Amount (in $) Mar-18 Equipment 30500 31-Mar-18 balance c/d 30500 30500 30500 Dr. Purchases A/c Cr. Date Particulars Amount (in $) Date Particulars Amount (in $) Mar-18 Accounts payable 80000 31-Mar-18 balance c/d 80000 80000 80000 Dr. Accounts Payable A/c Cr. Date Particulars Amount (in $) Date Particulars Amount (in $) Mar-18 Purchases 80000 Mar-18 Cash 71000 31-Mar-18 balance c/d 9000 80000 80000 Dr. Sales A/c Cr. Date Particulars Amount (in $) Date Particulars Amount (in $) Mar-18 Accounts Receivable 125000 31-Mar-18 balance c/d 125000 125000 125000 Dr. Accounts Receivables A/c Cr. Date Particulars Amount (in $) Date Particulars Amount (in $) Mar-18 Sales 125000 Mar-18 Cash 56000 31-Mar-18 balance c/d 69000 125000 125000 Dr. Rent A/c Cr. Date Particulars Amount (in $) Date Particulars Amount (in $) Mar-18 Cash 5100 Mar-18 Profit & Loss A/c 5100 31-Mar-18 balance c/d 0 5100 5100 Dr. Prepaid Insurance A/c Cr. Date Particulars Amount (in $) Date Particulars Amount (in $) Mar-18 Cash 6100 31-Mar-18 balance c/d 6100 6100 6100 Dr. Provision for Depreciation A/c Cr. Date Particulars Amount (in $) Date Particulars Amount (in $) Mar-18 Profit & Loss A/c 1100 Mar-18 Depreciation 1100 31-Mar-18 balance c/d 0 1100 1100

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