Ryan terlecki organized a new internet company, capuniverse, inc. the company specializes in baseball-type caps with logos printed on them. ryan, who is never without a cap, believes that his target market is college and high school students. you have been hired to record the transactions occurring in the first two weeks of operations.
a. (E) Common stock US$ 26 (credit) and (A) cash US$ 26 (debit)
b. (L) Loans payable US$ 64,000 (credit) and (A) cash US$ 64,000 (debit)
c. (E) Rental expenses US$ 1,100 (debit), (A)Rental paid in advance US$ 1,100 (debit) and (A)cash US$ 2,200
d. (A) Prepaid insurance US$ 1,800 (debit) and (A) cash US$ 1,800 (credit)
e. (A) Fixed Assets US $ 11,000 (debit), (A) cash US$ 2,600 (credit) and (L) accounts payable US$ 8,400 (credit)
f. (A) Inventory US$ 3,200 (debit) and (A) cash US$ 3,200 (credit).
g. (E) Advertisement expenses US$ 270 (debit) and (A) cash US$ 270 (credit)
h. (R) Sells US$ 1,700 (credit), (A)cash US$ 850 (debit) and (A) accounts receveible US$ 850 (debit). (E) Cost of sales US$ 900 (debit) and (A) Inventory US$ 900 (credit).
i. (L) Accounts payable US$ 8,400 (debit) and (A) cash US$ 8,400 (credit).
j. (L) Income in advance US$ 230 (credit) and (A)cash US$230 (debit)
A. Issued 2,300 shares of $0.01 par value common stock to investors for cash at $23 per share.
Dr Cash (A) 52,900
Cr Common stock (SE) 23
Cr Additional paid in capital (SE) 52,877
B. Borrowed $62,000 from the bank to provide additional funding to begin operations; the note is due in two years.
Dr Cash (A) 62,000
Cr Notes payable (L) 62,000
C. Paid $2,300 cash for rent of a warehouse: $1,150 for the current month’s rent and another $1,150 for next month’s rent.
Dr Rent expense (E) 1,150
Dr Prepaid rent (A) 1,150
Cr Cash (A) 2,300
D. Paid $1,560 for a one-year fire insurance policy on the warehouse (recorded as a prepaid expense).
Dr Prepaid insurance (A) 1,560
Cr Cash (A) 1,560
E. Purchased furniture and fixtures for the warehouse for $17,000, paying $3,500 cash and the rest on account. The amount is due within 30 days.
Dr FF&E (A) 17,000
Cr Cash (A) 3,500
Cr Accounts payable (L) 13,500
F. Purchased for $3,100 cash The University of Pennsylvania, Notre Dame, The University of Texas at Austin, The Ohio State University, and Michigan State University baseball caps as inventory to sell online.
Dr Merchandise inventory (A) 3,100
Cr Cash (A) 3,100
G. Placed advertisements on Google for a total of $260 cash; the ads were run immediately.
Dr Advertisement expense (E) 260
Cr Cash (A) 260
H. Sold caps totaling $2,300, half of which was charged on account. The cost of the caps sold was $1,500. (Hint: Make two entries.)
Dr Cash (A) 1,150
Dr Accounts receivable (A) 1,150
Cr Sales revenue (R) 2,300
Dr Cost of goods sold (E) 1,500
Cr Merchandise inventory (A) 1,500
I. Made full payment for the furniture and fixtures purchased on account in.
Dr Accounts payable (L) 13,500
Cr Cash (A) 13,500
J. Received $250 from a customer on account.
Dr Cash (A) 250
Cr Accounts receivable (A) 250