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.
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