Question2. Herrold Consulting incorporated on February 1, 2011. The company engaged in the following transactions during its first month of operations: Feb. 1 Issued capital stock in exchange for $750,000 cash. Feb. 5 Borrowed $50,000 from the bank by issuing a note payable. Feb. 8 Purchased land, building, and office equipment for $600,000. The value of the land was $100,000, the value of the building was $450,000, and the value of the office equipment was $50,000. The company paid $300,000 cash and issued a note payable for the balance. Feb. 11 Purchased office supplies for $600 on account. The supplies will last for several months. Feb. 14 Paid the local newspaper $400 for a full-page advertisement. The ad will appear in print on February 18. Feb. 20 Several of the inkjet printer cartridges that Herrold purchased on February 11 were defective. The cartridges were returned and the office supply store ređuced Herrold's outstanding balance by $100. Feb. 22 Performed consulting services for $6,000 cash. Feb. 24 Billed clients $9,000. Feb. 25 Paid salaries of $5,000. Feb. 28 Paid the entire outstanding balance owed for office supplies purchased on February 11. A partial list of the account titles used by the company includes: Cash Notes Payable Accounts Receivable Accounts Payable Office Supplies Capital Stock Land
Question2. Herrold Consulting incorporated on February 1, 2011. The company engaged in the following transactions during its first month of operations: Feb. 1 Issued capital stock in exchange for $750,000 cash. Feb. 5 Borrowed $50,000 from the bank by issuing a note payable. Feb. 8 Purchased land, building, and office equipment for $600,000. The value of the land was $100,000, the value of the building was $450,000, and the value of the office equipment was $50,000. The company paid $300,000 cash and issued a note payable for the balance. Feb. 11 Purchased office supplies for $600 on account. The supplies will last for several months. Feb. 14 Paid the local newspaper $400 for a full-page advertisement. The ad will appear in print on February 18. Feb. 20 Several of the inkjet printer cartridges that Herrold purchased on February 11 were defective. The cartridges were returned and the office supply store ređuced Herrold's outstanding balance by $100. Feb. 22 Performed consulting services for $6,000 cash. Feb. 24 Billed clients $9,000. Feb. 25 Paid salaries of $5,000. Feb. 28 Paid the entire outstanding balance owed for office supplies purchased on February 11. A partial list of the account titles used by the company includes: Cash Notes Payable Accounts Receivable Accounts Payable Office Supplies Capital Stock Land
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Required
a. Prepare journal entries, including explanat
b. ions, for the above transactions.
Must solve B part.
Transcribed Image Text:Question2. Herrold Consulting incorporated on February 1, 2011. The company engaged
in the following transactions during its first month of operations:
Feb. 1 Issued capital stock in exchange for $750,000 cash.
Feb. 5 Borrowed $50,000 from the bank by issuing a note payable.
Feb. 8 Purchased land, building, and office equipment for $600,000. The value of the land was
$100,000, the value of the building was $450,000, and the value of the office equipment was
$50,000. The company paid $300,000 cash and issued a note payable for the balance.
Feb. 11 Purchased office supplies for $600 on account. The supplies will last for several months.
Feb. 14 Paid the local newspaper $400 for a full-page advertisement. The ad will appear in print
on February 18.
Feb. 20 Several of the inkjet printer cartridges that Herrold purchased on February 11 were
defective. The cartridges were returned and the office supply store reduced Herrold's outstanding
balance by $100.
Feb. 22 Performed consulting services for $6,000 cash.
Feb. 24 Billed clients $9,000.
Feb. 25 Paid salaries of $5,000.
Feb. 28 Paid the entire outstanding balance owed for office supplies purchased on February 11.
A partial list of the account titles used by the company includes:
Cash Notes Payable
Accounts Receivable
Accounts Payable
Office Supplies
Capital Stock
Land
Client Service Revenue
Building
Advertising Expense
Office Equipment
Salaries Expense
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