MERCHANDISING ACOUNTING Joe Blink opened Blink Corporations Merchandising busine
ID: 2491641 • Letter: M
Question
MERCHANDISING ACOUNTING Joe Blink opened Blink Corporations Merchandising business on October 1. Blink applies the perpetual inventory system. Blink provides a 2-year warranty with one of its products which was first sold in October Prepare journal entries to record the following merchandising transactions. Oct. 1. Issued 580,000 shares of $5 par value common stock for $65 per share. 1. Paid three months' rent on a lease rental contract, $3,800. 1 Issued 22,500 shares of common stock to attorneys in payment of their bill of $70,000 for services rendered in helping the company organize. 1 Purchased office equipment on account from Office Station Co. $8,000. 1 Purchased merchandise form Boden Company for $8,200 under credit terms of 1/1 S. n/30, FOB shipping point, invoice dated October 1. 1 Sold merchandise that cost $900 to Rivera Co. for $2,800 under credit terms of 2/10, n/60 FOB shipping point. Invoice dated October 1. 2. Issued a 4 year, $70,000, zero interest bearing note to Reid Company and received cash of $71,776. 2 Paid $625 cash for freight charges on the purchase of October 1. Accept a 60 day. 10% note to replace its existing $1,800 account receivable to Rivera Co on October 1 Established a petty cash fund in the amount of $280. Paid the premiums on property and casualty insurance policies, $9,400. Purchased used truck for $8,000, paying $3,000 cash and the balance on account Sold merchandise to creek Co for $700 under credit terms of 2/10. n/60. Fob shipping point, invoice dated October 7. Issued 28,000 shares of $5 par value stock for land valued at $680,000. Purchased merchandise form Light Co. For $6,200 under credit items of 2/15, n/60, FOB destination, invoice dated October 9.Explanation / Answer
Journal Entries in the book s of Joe Blink Opened Blink Corporations
(All Amount in $)
Date Particular Amount Dr . Amount Cr.
Oct 1 Bank a/c Dr 37700000
To Common Stock A/c 2900000
To Common Stock Premium A/c 34800000
( Being 580000 common stock issued at premium $60and face value $5)
Oct 1 Prepaid Rent A/c Dr 3800
To Bank A/c 3800
(Being rent on lease rental contract for three month)
Oct 1 Legal Expenses A/c Dr 70000
To Common Stock A/c 70000
(Being 22500 common stock issued against bill of power of attorney)
Oct 1 Office Equipment A/c Dr 8000
To Office Station Co. 8000
( Being office equipment purchase from office station co.)
Oct 1 Purchase A/c Dr 8200
To Boden Company 8200
( Being Purchase good s from Boden company on credit )
Oct 1 Rivera Company Dr 2800
To Sale A/c 2800
(Being Goods sold to Rivera co . on credit)
Oct 2 Bank A/c Dr 70000
Discount on Note Payable A/c Dr 1776
To Notes Payable A/c 71776
(Being zero interest bearing note issued to Reid co. )
Oct 2 Freight Inward A/c Dr 625
To Cash A/c 625
( Being freight inward paid )
Oct 3 Account Receivable A/c Dr 1800
To Rivera Company 1800
( Being note accept by Rivera co.)
Oct 4 Petty Cash A/c Dr 280
To Cash A/c 280
( Being petty cash fund established)
Oct 5 Insurance Premium A/c Dr 9400
To Bank A/c 9400
( Being amount paid for insurance premium as per policy)
Oct 6 Truck A/c Dr 8000
To Cash A/c 3000
To Creditors A/c 5000
( Being Truck purchase for $8000 and cash paid $3000 and balance on A/c)
Oct 7 Creek co. Dr 700
To sale A/c 700
( Being Goods sold on credit to creek co.)
Oct 8 Land A/c Dr 680000
To Common Stock Shares A/c 140000
To Common Stock Premium A/c 540000
( Being Shares issued against land purchased )
Oct 9 Purchase A/c Dr 6200
To Light Co. 6200
( Being Goods purchase on credit from Light co.)
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