Prepare journal entries to record the following transactions of Daisy King Ice C
ID: 2419127 • Letter: P
Question
Prepare journal entries to record the following transactions of Daisy King Ice Cream Company. If an entry is not required, state "No Entry".
Prepare a balance sheet, income statement, and statement of shareholder's equity
1. Started business by issuing 10,000 shares of capital stock for $20,000.
2. Signed a franchise agreement to pay royalties of 5% of sales.
3. Leased a builidng for three years at $500 per month and paid 6 months rent in advance.
4. Purchased equipment for $5,400, paying $1,000 down and signing a two-year, 10% note for the balance.
5. Purchased $1,800 of supplies on account.
6. Recorded cash sales of $800 for the first week.
7. Paid weekly salaries and wages, $320.
8. Paid for supplies purchased in item (5).
9. Paid royalties due on first week's sales.
10. Recorded deprecitaion on equipment, $50.
Explanation / Answer
Journal entries
T accounts
Statement of shareholder's equity
1) Cash $ 20,000 Common stock $ 20,000 2) No entry 3) Prepaid rent $ 3,000 Cash $ 3,000 4) Equipment $ 5,400 Cash $ 1,000 Notes payable at 10% $ 4,400 5) Supplies $ 1,800 Accounts payable $ 1,800 6) Cash $ 800 Sales revenue $ 800 7) Salaries expenses $ 320 Cash $ 320 8) Accounts Payable $ 1,800 Cash $ 1,800 9) Royalties Expenses $ 40 Cash $ 40 10) Depreciation Expenses $ 50 Accumulated depreciation $ 50