The following transactions occurred during January 2021:

Jan. 1 Sold merchandise for cash, $2,600. The cost of the merchandise was $1,100. The company uses the perpetual inventory system.

2 Purchased equipment on account for $4,600 from the Strong Company.

4 Received a $200 invoice from the local newspaper requesting payment for an advertisement that Whitlow placed in the paper on January 2.

8 Sold merchandise on account for $4,800. The cost of the merchandise was $2,600.

10 Purchased merchandise on account for $9,400.

13 Purchased equipment for cash, $800.

16 Paid the entire amount due to the Strong Company.

18 Received $3,800 from customers on account.

20 Paid $800 to the owner of the building for January's rent.

30 Paid employees $2,800 for salaries and wages for the month of January.

31 Paid a cash dividend of $1,000 to shareholders.

Prepare journal entries.

Answer and Explanation:

According to the scenario, journal entry of the given data are as follow:-

Journal Entry

On Jan 1

Cash A/c Dr. $2,600

To Sales revenue A/c $2600

(Being the sales is recorded)

Cost of goods sold A/c Dr. $1,100

To Merchandise Inventory A/c $1,100

(Being the cost of goods sold is recorded)

On Jan 2

Equipment A/c Dr. $4,600

To Accounts payable A/c $4,600

(Being the purchase of equipment on account is recorded)

On Jan 4

Advertisement expenses A/c Dr. $200

To Accounts payable A/c $200

(Being the advertising expense is recorded)

On Jan 8

Accounts receivable A/c Dr. $4,800

To Sales revenue A/c $4,800

(Being the sales is recorded)

Cost of goods sold A/c Dr. $2,600

To Merchandise Inventory A/c $2,600

(Being the cost of goods sold)

On Jan 10

Merchandise Inventory A/c Dr. $9,400

To Accounts payable A/c $9,400

(Being the purchase of merchandise on account)

On Jan 13

Equipment A/c Dr. $800

To cash A/c $800

(Being purchase of equipment is recorded)

On Jan 16

Accounts payable A/c Dr. $4,600

To Cash A/c $4,600

(Being the cash paid is recorded)

On Jan 18

Cash A/c Dr. $3,800

To Accounts receivable A/c $3,800

(Being the cash received is recorded)

On Jan 20

Rent expense A/c Dr. $800

To cash A/c $800

(Being the rent expense is recorded)

On Jan 30

Salaries and wages expense A/c Dr. $2,800

To cash A/c $2,800

(Being the salaries and wages expense is recorded)

On Jan 31

Dividends A/c Dr. $1,000

To cash A/c $1,000

(Being the cash dividend is paid)