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    Recording Transactions using T Accounts: Example Problem

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    Using T accounts, record the following transactions to establish a new company:

    a) Company is established with a cash investment of $200,000
    b) Purchased inventory on account for $60,000.

    Part 2: Now, again using T accounts, record the following transactions to operate this company:

    a) Cash sales of $140,000 are generated
    b) Sold goods for $100,000 cash. The goods originally cost $65,000.
    c) Paid $30,000 cash for employee wages.
    d) The company received $75,000 in cash as an additional investment by the stockholders (owners) of the company.
    e) Occupancy (rent) expense is $20,000
    f) The company purchased a building for $80,000. The company paid $50,000 of the purchase price in cash and signed a mortgage contract obligating it to pay the remaining $30,000 over the next 10 years.
    g) Paid $12,500 cash for advertising.
    h) Paid cash dividends of $10,000.

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    Solution Summary

    Provides steps necessary to record transactions using T accounts.