Chapter 2, Problem 5E

Recording Journal Entries

Refer to E2-4.

Required:

For each of the events in E2-4, prepare journal entries, checking that debits equal credits.

E2-4 Determining Financial Statement Effects of Several Transactions

The following events occurred for Favata Company:

1. a. Received $10,000 cash from owners and issued stock to them.
2. b. Borrowed $7,000 cash from a bank and signed a note due later this year.
3. c. Bought and received $800 of equipment on account.
4. d. Purchased land for $12.000: paid $1,000 in cash and signed a long-term note for $11.000.
5. e. Purchased S3.000 of equipment, paid $1.000 in cash and charged the rest on account.