During July 2006, Woodbury, Inc., completed the following transactions. Prepare the journal entry for each transaction.
July 2 Received $400,000 for 8,000 shares of capital stock.
4 Purchased $80,000 of equipment, with 75% down and 25% on a note payable.
5 Paid utilities of $3,500 in cash.
9 Sold equipment for $12,500 cash (no gain or loss).
13 Purchased $300,000 of inventory, paying 40% down and 60% on credit.
14 Paid $7,500 cash insurance premium for July.
18 Sold inventory costing $45,000 for $62,000 to customers on account to be paid at a later date.
20 Collected $4,000 from accounts receivable.
24 Sold inventory costing $36,000 for $55,000 to customers for cash.
27 Paid property taxes of $1,400.
30 Paid $180,000 of accounts payable for inventory purchased on July 13.
Notes to the solution
1. No distinction is made between capital stock and additional paid in capital. Normally we would know the breakdown.
2. In the sale of equipment ...
The solution presents the journal entries complete with explanations for the entries. Also included are four notes which may either explain or affect the entries made.