Patty Stone started a new store to sell backpacks in January. The following events occurred inthe first month of operations.a. Issued 5,000 shares of $1 par value common stock to investors for cash at $16 pershare.b. Borrowed $50,000 from the bank; the note is due in three years.c.Paid $3,200 for a one-year fire insurance policy on the warehouse (Hint: recorded as aprepaid expense). Coverage will start on February 1st.Purchased backpacks for $5,600 cash as inventory to sell online.Sold backpacks for $3,800, half of which was charged on account. The cost of thebackpacks sold was $2,300. (Hint: Make two entries.)f. Received $1,200 from a customer on account.d.e.Required:Prepare journal entries that should be recorded in January for each transaction. Note thattransaction (e) will require two entries, one for revenue and one for the related expense.(If no entry is required for a transaction/event, write "No journal entry required")

The journal entries are prepared to record the transactions on regular basis. The adjustment entries…

Patty Stone started a new store to sell backpacks in January. The following events occurred in the first month of operations. a. Issued 5,000 shares of $1 par value common stock to investors for cash at $16 per share. b. Borrowed $50,000 from the bank; the note is due in three years. c. Paid $3,200 for a one-year fire insurance policy on the warehouse (Hint: recorded as a prepaid expense). Coverage will start on February 1st. d. Purchased backpacks for $5,600 cash as inventory to sell online. e. Sold backpacks for $3,800, half of which was charged on account. The cost of the backpacks sold was $2,300. (Hint: Make two entries.) Received $1,200 from a customer on account. f.

Patty Stone started a new store to sell backpacks in January. The following events occurred in the first month of operations. a. Issued 5,000 shares of $1 par value common stock to investors for cash at $16 per share. b. Borrowed $50,000 from the bank; the note is due in three years. c. Paid $3,200 for a one-year fire insurance policy on the warehouse (Hint: recorded as a prepaid expense). Coverage will start on February 1st. d. Purchased backpacks for $5,600 cash as inventory to sell online. e. Sold backpacks for $3,800, half of which was charged on account. The cost of the backpacks sold was $2,300. (Hint: Make two entries.) Received $1,200 from a customer on account. f.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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