The following transactions occurred during the month of June 2018 for the Stride

Question

The following transactions occurred during the month of June 2018 for the Stridewell Corporation. The company owns and operates a retail shoe store. Issued 145,000 shares of common stock in exchange for $725,000 cash. Purchased furniture and fixtures at a cost of $117,500. $47,000 was paid in cash and a note payable was signed for the balance owed. Purchased inventory on account at a cost of $290,000. The company uses the perpetual inventory system. Credit sales for the month totaled $493,000. The cost of the goods sold was $246,500. Paid $6,750 in rent on the store building for the month of June. Paid $3,480 to an insurance company for fire and liability insurance for a one-year period beginning June 1, 2018. Paid $209,525 on account for the merchandise purchased in 3. Collected $98,600 from customers on account. Paid shareholders a cash dividend of $7,250. Recorded depreciation expense of $2,350 for the month on the furniture and fixtures. 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.)

Explanation / Answer

Note - 1 - Calculation of Insurance expense

Total Insurance amount paid for 12 months (Prepaid Insurance) = $3,480

Insurance amount for 1 month = $3,480 ÷ 12 months = $290

Therefore,

Insurance expense to be recorded for the month of June = $290

Date Account Titles and Explanation Debit Credit Cash a/c $725,000 Common Stock a/c $725,000 [To record issue of common stock for cash] Furniture and fixtures a/c $117,500 Cash a/c $47,000 Notes Payables [$117,500 - $47,000] $70,500 [To record purchase of furniture and fixtures] Inventory a/c $290,000 Accounts payable a/c $290,000 [To record the purchase of inventory on account] Accounts receivable a/c $493,000 Sales revenue a/c $493,000 [To record the credit sales] Cost of Goods sold a/c $246,500 Inventory a/c $246,500 [To record the cost of sales] Rent Expense a/c $6,750 Cash a/c $6,750 [To rent paid for the month of June] Prepaid Insurance a/c $3,480 Cash a/c $3,480 [To record Insurance paid for 1 year] Accounts payable a/c $209,525 Cash a/c $209,525 [To record cash paid to suppliers] Cash a/c $98,600 Account receivable a/c $98,600 [To record cash received from the customers] Cash dividend a/c $7,250 Cash a/c $7,250 [To record cash dividend paid] Depreciation Expense a/c $2.350 Accumulated depreciation - Furniture & Fixtures $2,350 [To record depreciation for the month of June] Insurance Expense a/c [Note 1] $290 Prepaid Insurance a/c $290 To record insurance expense for the month of June]

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