Answer and Explanation:
The Journal entries are prepared below:-
1. Cash Dr, $500,000
To Common stock $100,000
To Paid in capital of par $400,000
(Being issue of shares in excess of par is recorded)
2. Furniture and fixtures Dr, $100,000
To Cash $40,000
To Notes payable $60,000
(Being purchase of furniture and fixtures is recorded)
3. Inventory Dr, $200,000
To accounts payable $200,000
(Being inventory on account is recorded)
4. Accounts receivable Dr, $280,000
Cost of goods sold Dr, $140,000
To Sales $280,000
To Inventory $140,000
(Being credit sales is recorded)
5. Rent expenses Dr, $6,000
To Cash $6,000
(Being rent paid is recorded)
6. Prepaid insurance Dr, $3,000
To Cash $3,000
(Being insurance paid for one year is recorded)
7. Accounts payable Dr, $120,000
To Cash $120,000
(Being purchase of goods is recorded)
8. Cash Dr, $55,000
To Accounts receivable $55,000
(Being collection from customers on account is recorded)
9. Dividend Dr, $5,000
To Cash $5,000
(Being cash dividend to shareholders is recorded)
10. Depreciation expense Dr, $2,000
To Furniture and fixtures $2,000
(Being depreciation furniture and fixtures is recorded)
11. Insurance expense Dr, $250
To Prepaid insurance $250
(Being insurance expense for the month is recorded)
