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14 September, 12:17

Acquired $18,500 cash from the issue of common stock. Purchased inventory for $7,000 cash. Sold inventory costing $4,200 for $7,140 cash. Paid $850 for advertising expense. Required. Record the general journal entries for the preceding transactions. b. Post each of the entries to T-accounts. c. Prepare a trial balance to prove the equality of debits and credits.

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  1. 14 September, 12:26
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    Entries

    On the issuance of stock

    Cash 18500

    Share capital 18500

    On purchase of inventory

    Stock 7000

    Cash 7000

    On the disposal of inventory

    Cash 7140

    inventory 4200

    Gain On disposal 2940

    Advetisement Expense

    Expense 850

    Cash 850

    T-Accounts

    Cash and Bank

    Opening 0

    Share capital 18500 Stock 7000

    Sale 7140 Adv. Expense 850

    Closing 17790

    Stock

    Opening 0

    Cash 7000 Cash Sale 4200

    Closing 2800

    Share Capital

    opening 0

    Cash 18500

    Closing 18500

    Gain On disposal

    opening 0

    Cash 2940

    Closing 2940

    Advetisement Expense

    Opening 0

    Cash 850 profit and loss 850

    Closing 0

    the trail balance is prepared at end of reporting to reconcile the closing debit credit during the year occurred on transactions. closing balace are put in according to their nature such as liability and equity account is credit nature account and asset and expense is debit nature account as prepared below

    Trail Balance

    Particular Debit Credit

    Cash 17790

    Stock 2800

    Share Capital 18500

    Gain 2940

    Advvertisement 850

    Closing Balance 21440 21440
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