Recording Journal Entries

Nathanson Corporation was organized on May 1. The following events occurred during the first month.

A. Received $68,000 cash from the five investors who organized Nathanson Corporation. Each investor received 101 shares of $10 par value common stock.

B. Ordered store fixtures costing $12,000.

C. Borrowed $20,000 cash and signed a note due in two years.

D. Purchased $17,000 of equipment, paying $1,900 in cash and signing a six-month note for the balance.

E. Lent $1,400 to an employee who signed a note to repay the loan in three months.

F. Received and paid for the store fixtures ordered in (b).

Prepare journal entries for each transaction.

A.

Cash $68,000 (debit)

Common Stock $68,000 (credit)

B.

Store fixtures $12,000 (debit)

Payable $12,000 (credit)

C.

Cash $20,000 (debit)

Note Payable $20,000 (debit)

D.

Equipment $17,000 (debit)

Cash $1,900 (credit)

Note Payable $15,100 (credit)

E.

Note Receivable $1,400 (debit)

Cash $1,400 (credit)

F.

Payable $12,000 (debit)

Cash $12,000 (credit)

Explanation:

A.

Recognize Cash and Recognize Equity - Common Stock

B.

Recognize Store fixtures and recognize a liability - Payable

C.

Recognize Cash - Asset and a Liability - Note Payable

D.

Recognize Equipment - Asset, Recognize Liability - Note Payable and de-recognize the Asset - Cash

E.

De-recognize Cash and Recognize the Asset - Note Receivable

F.

De-recognize the Liability - Payable and de-recognize the Asset Cash