Chapter 2, Problem 2.4E

Journal entries

• LO2–2

The following transactions occurred during the month of June 2018 for the Stridewell Corporation. The company owns and operates a retail shoe store.

1. Issued 100,000 shares of common stock in exchange for $500,000 cash.

2. Purchased office equipment at a cost of $100,000. $40,000 was paid in cash and a note payable was signed for the balance owed.

3. Purchased inventory on account at a cost of $200,000. The company uses the perpetual inventory system.

4. Credit sales for the month totaled $280,000. The cost of the goods sold was $140,000.

5. Paid $6,000 in rent on the store building for the month of June.

6. Paid $3,000 to an insurance company for fire and liability insurance for a one-year period beginning June 1, 2018.

7. Paid $120,000 on account for the merchandise purchased in 3.

8. Collected $55,000 from customers on account.

9. Paid shareholders a cash dividend of $5,000.

10. Recorded depreciation expense of $2,000 for the month on the office equipment.

11. Recorded the amount of prepaid insurance that expired for the month.

Required:

Prepare journal entries to record each of the transactions and events listed above.