Problem 3-9 Journal Entries Atkins Advertising Agency began business on January

Question

Problem 3-9 Journal Entries

Atkins Advertising Agency began business on January 2, 2010. The transactions entered into by Atkins during its first month of operations are as follows:

a.Acquired its articles of incorporation from the state and issued 100,000 shares of capital stock in exchange for $200,000 in cash.

b.Purchased an office building for $150,000 in cash. The building is valued at $110,000, and the remainder of the value is assigned to the land.

c.Signed a three-year promissory note at the bank for $125,000.

d. Purchased office equipment at a cost of $50,000, paying $10,000 down and
agreeing to pay the remainder in ten days.

e.Paid wages and salaries of $13,000 for the first half of the month. Office employees are paid twice a month.

f.Paid the balance due on the office equipment.

g.Sold $24,000 of advertising during the first month. Customers have until the 15th
of the following month to pay their bills.

h.Paid wages and salaries of $15,000 for the second half of the month.

i.Recorded $3,500 in commissions earned by the salespeople during the month.
They will be paid on the fifth of the following month.

Required
Prepare in journal form the entry to record each transaction.

Explanation / Answer

Letter (c) in parenthesis means "Credit". The formatting is off on this thing. a. Cash $200,000 (c) Common Stock, $2 par $200,000 b. Office building $110,000 Land $40,000 (c) Cash $150,000 c. Cash $125,000 (c) Notes payable $125,000 d. Office equipment $50,000 (c) Cash $10,000 (c) Accounts payable $40,000 e. Salary expense $13,000 (c) Cash $13,000 f. Accounts payable $40,000 (c) Cash $40,000 g. Accounts Receivable $24,000 (c) Advertising Income $24,000 h. Salary expense $15,000 (c) Cash $15,000 i. Salary expense (commissions) $3,500 (c) Salaries payable $3,500

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