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Cornerstones of Financial Accounti...

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Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Exercise 2-51 Transaction Analysis and Journal Entries

Pasta House Inc. was organized in January 2019. During the year, the transactions below occurred:

  1. On January 14, Pasta House sold Martin Halter, the firm’s founder and sole owner, 10,000 shares of its common stock for S8 per share.
  2. On the same day, Bank One loaned Pasta House $45,000 on a ID-year note payable.
  3. On February 22, Pasta House purchased a building and the land on which it stands from Frank Jakubek for $34,000 cash and a 5-year, $56,000 note payable. The land and building had appraised values Of $30,000 and $60,000, respectively.
  4. On March 1, Pasta House signed an $15,000 contract with Cosby Renovations to remodel the inside of the building. Pasta House paid $4,000 down and agreed to pay the remainder when Cosby completed its work.
  5. On May 3, Cosby completed its work and submitted a bill to Pasta House for the remaining $11,000.
  6. On May 20, Pasta House paid $11,000 to Cosby Renovations.
  7. On June 4, Pasta House purchased restaurant supplies from Glidden Supply for $650 cash.

Required:

Prepare a journal entry for each of these transactions.

To determine

Journal Entries:

The medium through which all the business transaction are recorded in the books of accounts are called journal entries.

Prepare journal entries for each of the transactions.

Explanation
    DateExplanationIncreaseDecrease
    January
    14Cash$80,000
    Common Stock80,000
    14Cash45,000
    Note Payable45,000
    February
    22Building 60,000
    Land30,000
    Cash$34,000
    Note Payable56,000
    March

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