Please HeLp!! Accounting Question...?
Question:
1. Company is incorporated. The owner pays $125,000 for 5000 shares of compnay stock.
2. Sept 21: Eqpmt worth $125 is purchased from a supplier. COmpany pays $75,000 in cash, and promises to pay the remainder in six months. Estimated life of the equpmt is 5 years (am i supposed to subtract depreciation here?)
3. During Sept and Oct: memberships to the company (its a fitness club) are sold to 300 people at $350 per person. Members pay 50% immediately and promise to pay the remainder in 30 days. The company records sales when a new member joins
4. During Sept and Oct: Company collects $30,000 owed by members
Answer:
1. Debit Cash 125,000
Credit Common Stock 125,000
2. ($125? I think you meant $125,000)
Debit Equipment 125,000
Credit Cash 75,000
Credit Accounts Payable 50,000
I don't know for which date you are doing all of these journal entries, but on the DATE THAT YOU PURCHASE IT, you don't enter depreciation. In subsequent periods (i.e. - year end), you will have an account for accumulated depreciation. You also can't calculate the depreciation here anyway, since the depreciation method that the firm is using isn't stated.
3. Debit Cash 52,500
Debit Accounts Receivable 52,500
Credit Memberships (or some made-up account like that) 105,000
4. Debit Cash 30,000
Credit Accounts Receivable 30,000
These websites might be able to help guide you when doing journal entries (as far as remembering what to debit and what to credit).
http://www.dwmbeancounter.com/tutorial/d...
http://ofp.fiu.edu/docs/accounting_refer...
More Questions & Answers...