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placed an order for office supplies costing $2,000. supplier intends to deliver later in the month. purchased equipment that cost $30,000; paid $10,000 cash and signed a promissory note to pay $20,000 in one month. negotiated and signed a one-year bank loan, and then deposited $5,000 cash in the company’s checking account. hired a new finance manager on the last day of the month. received an investment of $10,000 cash from the company’s owners in exchange for issuing common shares. supplies [ordered in (a)] were received, along with a bill for $2,000.



Answer :

  1. Placed an order for office supplies costing $2,000. supplier intends to deliver later in the month.
  2. Purchased equipment that cost $30,000; paid $10,000 cash and signed a promissory note to pay $20,000 in one month.
  3. Negotiated and signed a one-year bank loan, and then deposited $5,000 cash in the company’s checking account.
  4. Hired a new finance manager on the last day of the month.
  5. Received an investment of $10,000 cash from the company’s owners in exchange for issuing common shares.
  6. Supplies [ordered in (a)] were received, along with a bill for $2,000.

Indication of the amount, accounts, and directions of effects of the transaction are given below.

The accounts along with the amount and the direction of effect of the transactions is as follows:

  1. No journal entry required
  2. Dr: Equipment $30,00                                                                         Cr: Cash $10,000 & Note Payable (short term) $20,000
  3. Dr: Cash $5,000                                                                                   Cr: Note Payable (short-term) $5,000
  4. No journal entry required
  5. Dr: Cash $10,000                                                                                 Cr: Contributed Capital $10,000
  6. Dr: Supplies $2,000                                                                              Cr: Accounts Payable $2,000

Hence, the amount, accounts, and directions of the effects of the transaction are given above.

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