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19 November, 13:00

Recording Journal Entries

Nathanson Corporation was organized on May 1. The following events occurred during the first month.

A. Received $68,000 cash from the five investors who organized Nathanson Corporation. Each investor received 101 shares of $10 par value common stock.

B. Ordered store fixtures costing $12,000.

C. Borrowed $20,000 cash and signed a note due in two years.

D. Purchased $17,000 of equipment, paying $1,900 in cash and signing a six-month note for the balance.

E. Lent $1,400 to an employee who signed a note to repay the loan in three months.

F. Received and paid for the store fixtures ordered in (b).

Prepare journal entries for each transaction.

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Answers (1)
  1. 19 November, 13:19
    0
    A.

    Cash $68,000 (debit)

    Common Stock $68,000 (credit)

    B.

    Store fixtures $12,000 (debit)

    Payable $12,000 (credit)

    C.

    Cash $20,000 (debit)

    Note Payable $20,000 (debit)

    D.

    Equipment $17,000 (debit)

    Cash $1,900 (credit)

    Note Payable $15,100 (credit)

    E.

    Note Receivable $1,400 (debit)

    Cash $1,400 (credit)

    F.

    Payable $12,000 (debit)

    Cash $12,000 (credit)

    Explanation:

    A.

    Recognize Cash and Recognize Equity - Common Stock

    B.

    Recognize Store fixtures and recognize a liability - Payable

    C.

    Recognize Cash - Asset and a Liability - Note Payable

    D.

    Recognize Equipment - Asset, Recognize Liability - Note Payable and de-recognize the Asset - Cash

    E.

    De-recognize Cash and Recognize the Asset - Note Receivable

    F.

    De-recognize the Liability - Payable and de-recognize the Asset Cash
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