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14 June, 11:56

This information relates to Marigold Real Estate Agency for the month of October, 2022. Oct. 1 Stockholders invested $41,000 in exchange for common stock of the corporation. 2 Hires an administrative assistant at an annual salary of $30,000. 3 Buys equipment for $4,400 on account. 6 Sells a house and lot for M Springer; commissions due from Springer, $13,000 (not paid by Springer at this time). 10 Receives cash of $170 as commission for acting as rental agent renting an apartment. 27 Pays $880 on account for the equipment purchased on October 3. 30 Pays the administrative assistant $2,500 in salary for October. Journalize the transactions.

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  1. 14 June, 12:19
    0
    Journal entries:

    Oct 1

    Dr Cash 41,000

    Cr Common stock 41,000

    Oct 2

    No entry

    Oct 3

    Dr Equipment 4,400

    Cr Accounts payable 4,400

    Oct 6

    Dr Accounts receivable 13,000

    Cr Sales 13,000

    Oct 10

    Dr Cash 170

    Cr Service revenue 170

    Oct 27

    Dr Accounts Payable 880

    Cr Cash 880

    Oct 30

    Dr Salaries expense 2,500

    Cr Cash 2,500
  2. 14 June, 14:49
    0
    Oct 1.

    Debit Cash account $41,000

    Credit Common stock $41,000

    Being entries to record cash received for common stock

    Oct 2.

    No entries are required

    Oct 3.

    Debit Equipment account $4,400

    Credit Accounts payable $4,400

    Being entries to recognize asset purchased on account

    Oct 6.

    Debit accounts receivable $13,000

    Credit Revenue account $13,000

    Being entries to recognize commission yet to be received from Springer.

    Oct 10.

    Debit Cash account $170

    Credit Revenue account $170

    Being entries to recognize cash received for acting as rental agent

    Oct 27.

    Debit Accounts payable $880

    Credit Cash account $880

    Being entries to recognize cash paid for equipment purchased earlier

    Oct 30. Since annual salaries is $30,000, monthly salaries

    = $30,000/12

    = $2,500

    Debit Salaries expense $2,500

    Credit Cash account $2,500

    Being entries to recognized salary expense paid for October

    Explanation:

    When cash is received for common stock, cash increases and so does equity. when an employment is given to an employee, salary expense is not incurred until the employee has worked.

    For equipment purchased on account, the purchase creates a liability in form of accounts payable while asset balance also increases.

    Rental income and other forms of income (revenue in this case) must be recognized immediately it is earned and not necessarily when cash is paid.
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