M2-4

1 Accounts Payable CL 9 Long-Term Investments NCA

2 Accounts Receivable CA 10 Notes Payable due in 3 years NCL
3 Buidlings PPE 11 Notes Receivable due in 6 Months CA
4 Cash CA 12 Prepaid Rent CA
5 Common Stock SE 13 Retained Earnings SE
6 Land PPE 14 Supplies CA
7 Inventory CA 15 Utilities Payable CL
8 Income Tax Payable CL 16 Wages Payable CL
E2-13

May transactions:

a Five stockholders invested $70,000 cash in the business in exchange for common stock for 100 shares each with a par value of $10.
b Ordered store fixtures costing $15,000.
c Borrowed $18,000 cash and signed a two year note.
d Purchased $11,000 of equipment, paying $1,500 in cash and signing a six month note for the balance.
e Lent $2,000 to an employee who signed a note to repay the loan in three months.
f Received and paid for the store fixtures ordered in b.

General Journal

Date Account Titles and Explanations Debit Credit

a Debit Cash 70,000
Credit Common Stock 5,000
Credit Additional Paid In Capital 65,000
Five stockholders invested $70,000 cash in the business in exchange for common stock for 100 shares each with a par value of $10.

b No accounting transaction

c Debit Cash 18,000

Credit Note Payable 18,000
Borrowed $18,000 cash and signed a two year note.

d Debit Equipment 11,000

Credit Cash 1,500
Credit Note Payable 9,500
Purchased $11,000 of equipment, paying $1,500 in cash and signing a six month note for the balance.

e Debit Note Receivable 2,000

Credit Cash 2,000
Lent $2,000 to an employee who signed a note to repay the loan in three months.

f Debit Fixtures 15,000

Credit Cash 15,000
Received and paid for the store fixtures ordered in b.