During its first month of operation, Peter's Auto Supply Corporation, which specializes the sale of auto equipment and supplies, completed the following transactions. July TransactionsJuly 1Issued Common Stock in exchange for $100,000 cash. July 1Paid $4,000 rent for the months of July and AugustJuly 2Paid the insurance company $2,400 for a one year insurance policy, beginning July 1. July 5Purchased inventory on account for $35,000 (Assume that the perpetual inventory system is used.)July 6Borrowed $36,500 from a local bank and signed a note. The interest rate is 10%, and principal and interest is due to be repaid in six months.July 8Sold inventory on account for $17,000. The cost of the inventory is $7,000.July 15Paid employees $6,000 salaries for the first half of the month.July 18Sold inventory for $15,000 cash. The cost of the inventory was $6,000.July 20Paid $15,000 to suppliers for the inventory purchased on January 5.July 26Collected $6,000 on account from customers.July 30Paid $1,000 to the local utility company for July gas and electricity.Preapre a Trial Balance

First, we need to identify the accounts involved in each transaction and determine whether each…

Answered: During its first month of operation,…

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ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter6: Cash And Receivables

Section: Chapter Questions

Problem 11RE: On December 1 of the current year, Jordan Inc. assigns 125,000 of its accounts receivable to...

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During its first month of operation, Peter's Auto Supply Corporation, which specializes the sale of auto equipment and supplies, completed the following transactions.

July Transactions
July 1	Issued Common Stock in exchange for $100,000 cash.
July 1	Paid $4,000 rent for the months of July and August
July 2	Paid the insurance company $2,400 for a one year insurance policy, beginning July 1.
July 5	Purchased inventory on account for $35,000 (Assume that the perpetual inventory system is used.)
July 6	Borrowed $36,500 from a local bank and signed a note. The interest rate is 10%, and principal and interest is due to be repaid in six months.
July 8	Sold inventory on account for $17,000. The cost of the inventory is $7,000.
July 15	Paid employees $6,000 salaries for the first half of the month.
July 18	Sold inventory for $15,000 cash. The cost of the inventory was $6,000.
July 20	Paid $15,000 to suppliers for the inventory purchased on January 5.
July 26	Collected $6,000 on account from customers.
July 30	Paid $1,000 to the local utility company for July gas and electricity.