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Analysis of Journal Entries

Analysis of Journal Entries

The following journal entries are from the books of Kara Elizabeth Company:

a. Buildings 90,000
cash 35,000
Mortgage Payable 55,000
b. Cash 25,000
Capital Stock 25,000
c. Cash 40,000
Loan Payable 40,000
D. Salary Expense 12,000
Cash 12,000
e.Inventory 12,500
Acct Payable 12,500
f. Accts Receivable 84,000
Sales 84,000
Cost of Goods 51,000
Inventory 51,000
G. Cash 62,000
Acct Receivable 62,000
h. Acct Payable 38,000
Cash 38,000

For each of the journal entries, prepare an explanation of the business event that is being represented.

Solution Preview

a. The company purchases a building for $90,000 and makes a $35,000 cash down payment and takes out a mortgage for the balance ($55,000).
b. The company issues and sells capital stock worth $25,000 for ...

Solution Summary

The solution looks at journal entries of Kara Elizabeth Co. and describes what events likely triggered the entries.