Strand Corp is just starting business and had the following transactions: 1.Inve

Question

Strand Corp is just starting business and had the following transactions:

1.Invested $150,000 into the business in return for Common Stock (no par value)

2.Sold $200,000 worth of services, 50% on account, 50% for cash

3.Purchased supplies inventory on account, $15,000

4.Purchased computer system for $20,000, borrowed 50% from the bank, the remainder paid in cash

5.Collected $70,000 from customers previously sold to on account

6.Paid the following expenses: wages $50,000, utilities $10,000, rent $25,000

7.Paid the bank back 50% of what they owed the bank

REQUIRED:

Make the Journal Entries for the transactions above (no explanations necessary)

Post journal entries to Ledgers, show balances in each account (“T” accounts)

Prepare a Trail Balance (with final totals)

Explanation / Answer

Journal Entries no Account titles & Explanations Debit Credit 1 Cash 150,000 common stock 150,000 2 Cash 100,000 Account receivable 100,000 Sales revenue 200,000 3 supplies 15,000 accounts payable 15,000 4 computer 20,000 bank loan 10,000 cash 10,000 5 Cash 70,000 account receivable 70,000 6 Wage expense 50,000 utilities 10,000 rent 25,000 Cash 85,000 7 Bank loan 5,000 cash 5,000 T- Account cash 1) 150,000 4) 10,000 2) 100,000 6) 85,000 5) 70,000 7) 5,000 End bal 220,000 Common stock 1) 150,000 Account receivable 2) 100,000 5) 70,000 End bal 30,000 Sales revenue 2) 200,000 supplies 3) 15,000 Accounts payable 3) 15,000 computer 4) 20,000 Bank loan 7) 5,000 4) 10,000 end bal 5,000 Wage expense 6) 50,000 Utility expense 6) 10,000 Rent expense 6) 25,000 Trial balance Account titles & Explanations Debit Credit cash 220,000 Common stock 150,000 Account receivable 30,000 Sales revenue 200,000 Supplies 15,000 Accounts payable 15,000 Computer 20,000 Bank loan 5,000 Wage expense 50,000 Utility expense 10,000 Rent expense 25,000 total 370,000 370000

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