Rahal and Watson, a small manufacturing company, entered into the following cash

ID: 2525216 • Letter: R

Question

Rahal and Watson, a small manufacturing company, entered into the following cash transactions during January 2017:

a. Prepare a journal entry for each transaction. Indicate the classification and the effect on the accounting equation.

b. Prepare a cash T-account and compute the company’s cash balance as of the end of January. Assume a beginning balance of $4,000.

1. Issued 800 shares of common stock for $30 each.

2. Collected $3,900 on outstanding accounts receivable.

3. Paid salaries and wages for the month of January of $1,530.

4. Purchased land as a long-term investment for $12,000 cash.

5. Paid a $6,000 dividend.

6. Sold a piece of equipment with a book value of $5,000 for $7,000 cash.

7. Paid $2,000 to the bank: $900 to reduce the principal on an outstanding loan and $1,100 as an interest payment.

8. Paid miscellaneous expenses of $5,000.

1. DR. BANK/CASH (800*$30) $24000

CR. SHARE CAPITAL $24000

2. DR BANK/ CASH $3900

CR OUTSTANDIN ACCOUNTS RECEIVABLE $ 3900

3. DR. SALARY AND WAGES $ 1530

CR. BANK/CASH $ 1530

4. DR. LAND $ 12000

CR BANK/CASH $12000

5. DR. DIVIDEND $ 6000

CR. BANK/CASH $ 6000

6. DR. BANK/ CASH 7000

CR. EQUIPMENT $5000

CR PROFIT ON EQUIPMENT $2000

7. DR. LOAN $900

DR INTEREST $1100

CR BANK/CASH $2000

8. DR, MISCELLANEOUS EXP. $ 5000

CR BANK/CASH $ 5000

CASH AND BANK A/C

$4000+ ($ 24000+ $ 3900 -$1530-$12000-$6000+$7000-$2000-$5000)= $12370 IS CLOSING BALANCE OF CASH/ BANK

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.