On Jan. 2, Callie Taylor invests $40,000 into the business in exchange for common stock. She journalized the transaction as follows but something is wrong with the journal entry. Use your knowledge of what a correct journal entry should look like to identify everything that is wrong. Select all answers which apply.

Date

Accounts

PR

Debit

Credit

Jan 2

Common Stock

40,000

Cash

4,000

(Owner invested in business)

The dollar amount is wrong in the Credit column

Common Stock should be listed below Cash

The Cash account should be listed first

The Common Stock account should be indented as it is credited

$ signs should be included in the Debit and Credit columns

On behalf of the business the entry will be as follow:

Accounts PR Dr. Cr.

$ $

Cash 40,000

Common Stock 40,000

Explanation:

As an Investor in the business Callie will not include common stock in her Journal entry and make a debit entry in this account. She also paid the cash against investment in the business so the cash will be credited. She will pass following entry.

Accounts PR Dr. Cr.

$ $

Investment 40,000

Cash 40,000

On behalf of the business the entry will be as follow:

Accounts PR Dr. Cr.

$ $

Cash 40,000

Common Stock 40,000

*Assuming that the stock is issued on the par value otherwise the share par value and number of share data are needed which are missing in the question.