Question

On January 1, 2018, the general ledger of Grand Finale Fireworks includes the following account balances:

Answer 1

Answer and Explanation:

The Journal entry is shown below:-

1. Cash Dr, $40,000

        To Common Stock $2,000

         To Additional Paid in capital $38,000

(Being issue of common stock is recorded)

2. Accounts Receivable Dr, $19,500

          To Service revenue $19,500

(Being Service revenue is recorded)

3. Supplies Dr, $6,700

         To Accounts payable $6,700

(Being additional supplies on account is recorded)

4. Treasury stock Dr, $25,200

          To Cash $25,200

(1,200 × $21)

(Being purchase of treasury stock is recorded)

5. Accounts payable Dr, $18,300

           To Cash $18,300

(Being accounts payable is recorded)

6. Cash Dr, $50,900

            To Service revenue $50,900

(Being service provided for cash is recorded)

7. Cash Dr, $18,400

              To Accounts Receivable $18,400

(Being cash is recorded)

8. Retained earnings Dr, $5,040

(18,000 - 1,200) × $0.30

              To Dividend payable $5,040

(Being dividend declared is recorded)

9. Cash Dr, $13,800

(600 × $23)

              To Treasury stock $12,600

               To Additional paid-in-capital  $1,200

(Being treasury stock is recorded)

10. Salaries expense Dr, $43,800

            To Cash $43,800

(Being Cash is recorded)