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    Fundamental Accounting Principles

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    Journal Entries
    Prepare the necessary general journal entries for the month of October for the Dolan Company for each situation given below. Dolan uses a perpetual inventory system.

    Oct. 5 Paid cash of $12,000 for operating expenses that were incurred and properly recorded in the previous period.

    Oct. 8 Purchased merchandise for $30,000 on account. Credit terms: 2/10, n/30; Freight terms: FOB shipping point.

    Oct. 10 Paid freight bill of $470 for merchandise purchased on October 8.

    Oct. 12 Borrowed $10,000 from Heritage Bank signing an 8%, 3-month note.

    Oct. 15 Paid for merchandise purchased on October 8. The company takes all discounts to which it is entitled.

    Oct. 20 Sold merchandise for $12,000 to Ed Gant on account. The cost of the merchandise sold was $8,000. Credit terms: 2/10, n/30.

    Oct. 22 Purchased a 2-year insurance policy for $2,400 cash.

    Oct. 25 Issued Credit Memo No. 151 to Ed Gant for $750 for merchandise returned by him from the sale on October 20. The cost of the merchandise returned was $500.

    Oct. 29 Purchased office equipment for $20,000 paying $4,000 in cash and signing a 3-month, 9% note for the remainder.

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    Solution Preview

    Hi there,
    <br>Here are your journal entries:
    <br>1. DR: Operating expenses $12,000
    <br>CR: Cash 12,000
    <br>2. DR: Merchandise $30,000
    <br>CR: Accounts Payable 30,000
    <br>3. DR: Cash $470
    <br>CR: Freight Expense ...

    Solution Summary

    This question involves the fundamentals of accounting