This information relates to Marigold Real Estate Agency for the month of October, 2022. Oct. 1 Stockholders invested $41,000 in exchange for common stock of the corporation. 2 Hires an administrative assistant at an annual salary of $30,000. 3 Buys equipment for $4,400 on account. 6 Sells a house and lot for M Springer; commissions due from Springer, $13,000 (not paid by Springer at this time). 10 Receives cash of $170 as commission for acting as rental agent renting an apartment. 27 Pays $880 on account for the equipment purchased on October 3. 30 Pays the administrative assistant $2,500 in salary for October. Journalize the transactions.

Question

Coby Hoffman

Business

23 May, 12:30

This information relates to Marigold Real Estate Agency for the month of October, 2022. Oct. 1 Stockholders invested $41,000 in exchange for common stock of the corporation. 2 Hires an administrative assistant at an annual salary of $30,000. 3 Buys equipment for $4,400 on account. 6 Sells a house and lot for M Springer; commissions due from Springer, $13,000 (not paid by Springer at this time). 10 Receives cash of $170 as commission for acting as rental agent renting an apartment. 27 Pays $880 on account for the equipment purchased on October 3. 30 Pays the administrative assistant $2,500 in salary for October. Journalize the transactions.

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Answers (2)

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Shyanne Duran · Answer 1

Oct 1.

Debit Cash account $41,000

Credit Common stock $41,000

Being entries to record cash received for common stock

Oct 2.

No entries are required

Oct 3.

Debit Equipment account $4,400

Credit Accounts payable $4,400

Being entries to recognize asset purchased on account

Oct 6.

Debit accounts receivable $13,000

Credit Revenue account $13,000

Being entries to recognize commission yet to be received from Springer.

Oct 10.

Debit Cash account $170

Credit Revenue account $170

Being entries to recognize cash received for acting as rental agent

Oct 27.

Debit Accounts payable $880

Credit Cash account $880

Being entries to recognize cash paid for equipment purchased earlier

Oct 30. Since annual salaries is $30,000, monthly salaries

= $30,000/12

= $2,500

Debit Salaries expense $2,500

Credit Cash account $2,500

Being entries to recognized salary expense paid for October

Explanation:

When cash is received for common stock, cash increases and so does equity. when an employment is given to an employee, salary expense is not incurred until the employee has worked.

For equipment purchased on account, the purchase creates a liability in form of accounts payable while asset balance also increases.

Rental income and other forms of income (revenue in this case) must be recognized immediately it is earned and not necessarily when cash is paid.

Cullen Erickson · Answer 2

Journal entries:

Oct 1

Dr Cash 41,000

Cr Common stock 41,000

Oct 2

No entry

Oct 3

Dr Equipment 4,400

Cr Accounts payable 4,400

Oct 6

Dr Accounts receivable 13,000

Cr Sales 13,000

Oct 10

Dr Cash 170

Cr Service revenue 170

Oct 27

Dr Accounts Payable 880

Cr Cash 880

Oct 30

Dr Salaries expense 2,500

Cr Cash 2,500