Madison Shoes manufactures athletic shoes and sports apparel. The following activities occurred during a recent year. The amounts are presented in millions of dollars. a. Purchased $228 in equipment; paid by signing a $4 long-term note and fulfilling the rest with cash. b. Issued $25 in additional common stock for cash contributions made by stockholders. c. Several Madison Shoes investors sold their own stock to other investors on the stock exchange for $170 per share of stock. Required: 1. For each of the events above, prepare journal entries. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in millions (i. e., 10,000,000 should be entered as 10).)

Question

Nathaniel Shah

Business

22 December, 22:34

Madison Shoes manufactures athletic shoes and sports apparel. The following activities occurred during a recent year. The amounts are presented in millions of dollars. a. Purchased $228 in equipment; paid by signing a $4 long-term note and fulfilling the rest with cash. b. Issued $25 in additional common stock for cash contributions made by stockholders. c. Several Madison Shoes investors sold their own stock to other investors on the stock exchange for $170 per share of stock. Required: 1. For each of the events above, prepare journal entries. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in millions (i. e., 10,000,000 should be entered as 10).)

+5

Answers (1)

Know the Answer?

Romeo Hanna · Answer 1

A. Journal Entry:

Equipment $228

Note Payable $4

Cash $224

Madison Shoes acquired the Equipment valued at $228 so debit that to Equipment.

The company signed $4 note so credit Note Payable as a liability.

Then the rest is credited to Cash which is $228 - $4 = $224

B. Journal Entry:

Cash $25

Common stock $25

Madison Shoes received cash from stockholders so debit to cash and pair it with a credit to common stock to recognize the increase in stockholders' equity.

C. No Journal Entry

There is No Journal Entry required since the company is not affected by the buying and selling of stocks by the investors.

The company should only journalize the transactions that affects the company directly.