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women's ww... shophearts Job Description Cloud ing Yahoo Googe Wipedia Facebook wite Lnkedin The Weather Channe Help S The following transactions occurred at the Daisy King Ice Cream Company 1. Started business by issuing 10,000 shares of common stock for $40,000. 2. Signed a franchise agreement to pay royalties of 5% of sales. 3. Leased a building for three years at $700 per month and paid six months' rent in advance. 4. Purchased equipment for $7,400, paying $2,000 down and signing a two-year, 10% note for the balance. 5. Purchased $3,800 of supplies on account 6. Recorded cash sales of $2,800 for the first week 7. Paid weekly salaries and wages, $1,320 8. Paid for supplies purchased in item (5). 9. Paid royalties due on first week's sales. 10. Recorded depreciation on equipment, $120 Required: Prepare journal entries to record each of the transactions listed above. (Ifno entry is required for a transaction/event, select journal entry required" in the first account field.) View transaction list Journal entry worksheet 3013Next: )

Explanation / Answer

5) Purchased $3,800 of supplies on account.

Purchases/ Inventory a/c 3800

To trade payables 3800

(since goods/Inventory puchased on credit we are crediting trade payable. If in case goods are purchased for cash we would have credited cash.)

6) cash sales of $2,800

cash a/c 2800

To sales 2800

(cash a/c is asset real a/c so Debit what comes in and credit what goes out. sales is nominal a/c so debit all expenses and losses credit all incomes and gains)

7) Paid weekly salaries and wages, $1320

salaries and wages 1320

To cash 1320

(salaries is nominal a/c so debit all expenses and losses credit all incomes and gains.cash a/c is asset real a/c so Debit what comes in and credit what goes out)

8) Paid for items purchase in (5)

Trade payables 3800

To cash 3800

(cash a/c is asset real a/c so Debit what comes in and credit what goes out)

9) Paid royalty on sales

(2800*5% = 140)

Royalties 140

To Cash 140

(royalties is nominal a/c so debit all expenses and losses credit all incomes and gains..cash a/c is asset real a/c so Debit what comes in and credit what goes out)

10) recorded depreciation 120

Depreciation 120

To equipment 120

or

Depreciation 120

To Accumulated depreciation 120

(since depreciation is expense it needs to be debited... some accounting methods use accumulated depreciation to record depreciation and keep asset at book value till the end of its useful life while some people deduct depreciation from cost of asset.)

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