How would you enter the Quickbooks Journal Entries for the following transaction

Question

How would you enter the Quickbooks Journal Entries for the following transactions:

1. Dec. 1, Purchased 200 shares of Chevron Corp. common stock for $93.50 per share to be held as a short-term investment. In addition to the purchase price $40 in brokerage fees were paid to acquire the stock. Check #101 was issued for payment [enter ck #101 under “Memo”] [note: for the $40, remember that “any cost incurred to acquire an asset must be recorded as a cost of that asset” (e.g. freight-in on purchased inventory is debited to the inventory account). Unclick the “adjusting entry” box for all JEs you are recording.

2. Dec. 1, purchased a computer from Computer World for $2,000. Sales tax of 7.5% must also be paid. Payment was made by signing a 2-year note which requires interest at an annual rate of 8% to be paid every quarter. The computer is expected to last 3 years after which time it is expected to be sold for $350. It will be depreciated using the double declining method (due to the rapid obsolescence of computer hardware).

3. Dec. 2, purchased $800 of supplies on credit under terms n/30 from Office Supplies Inc. Since these items are not going to be resold by Siesta Company (i.e they are not inventory), sales tax at 7.5% must also be paid. Office Supplies Inc. invoice #5450 was received at time of purchase (use in your description) and enter “Office Supplies Inc. under the “name” column and then add as a vendor when prompted.

4. Dec. 28, sold 100 shares of the 200 shares of Chevron Corporation stock held as a short-term investment for $104.25 per share. $40 in brokerage fees were incurred to sell the stock. [hint: the $40 is a reduction in the “proceeds from sale” (i.e. reduces the amount of cash received); also, if ½ of the shares purchased were sold ½ of the cost recorded under #1 above needs to be removed from the books).

Please show debit and credit entries for each transaction as they would be entered into Quickbooks.

Explanation / Answer

1. Dec.1    Shares of Chevron Corp. Dr. $18740 {(200 *93.5) + $40}

Bank Account Cr. $18740

( For 200 shares purchased @ 93.5 each and paid brokerage of $40; payment made by ck#101)

2. Dec.1 Computer Dr. $2000

Sales Tax paid Dr. $150

8% 2-year note Cr. $2150

(For computer purchased @$2000 and sales tax paid @7.5%, paid by 8% 2-year note interest to be paid quarterly)

3. Dec. 2 Office Supplies Inc. Dr. $800

Sales Tax paid Dr. $60

Creditors Cr. $860

(For office supplies purchased @$800 under invoice #5450 and paid $60 as sales tax on credit n/30 terms)

4. Dec.28 Cash Account Dr. $10385 {(100*104.25)-40}

Shares of Chevron Corp Cr. $9350 (100*93.5)

Profit on sale of shares Cr. $1035 (10385-9350)

(For  Shares of Chevron Corp sold at a profit of $1035)

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