Sarah Jones started a new business in January, 2012. Thefollowing are selected e

Question

Sarah Jones started a new business in January, 2012. Thefollowing are selected events that occurred in the businessduring the first year of operation. Please provide journalentries for these events (explanations are not necessary). 1. Sarah invested $65,000 to start the business, SaJon Inc.and received 100 shares of stock from the business. 2. Purchased inventory of $40,000 on account. 3. Signed a lease for two years for $24,000. The company paid $5,000 immediately; this was two month's rent in advance plus a security deposit. 4. Sold inventory, which cost $4,000, on account for $7,000 (recognize both the revenue and the expense). 5. Paid for the inventory purchased in 2). 6. Received payment for the amount billed in 4). 7. Paid $3,000 in salaries .8. Recognized the rent expense for the first month

Explanation / Answer

JOURNAL ENTRIES S.NO. ACCOUNTS TITLE AND EXPLANATIONS DEBIT $ CREDIT $ 1 Cash Account Dr. 65000      Common Stock 65000 2 Mercahndise Inventory Dr. 40000    Accounts payable 40000 3 Prepaid rent Dr. 4000 Security deposit Dr. 1000       Cash Account 5000 4 Accounts receivable Dr. 7000     sales revenue 7000 Cost of Goods sold Ddr. 4,000    Merchandise Inventory 4000 5 Accounts Payable Dr. 40000      Cash account 40000 6 Cash Account Dr. 7000     Accounts receivable 7000 7 Salaries expense Dr. 3000     Cash Account 3000 8 Rent expense Dr. 2000      Prepaid rent Account 2000

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