Reference no: EM132592475
Question - Stridewell Corporation started business in June 2016, selling various merchandise; uses perpetual inventory system, and follows all the applicable GAAP for reporting. Stridewell has incurred the following transactions during its first month of operations:
6/01/16: Issued 100,000 shares of common stock with $.10 par value, for $500,000 cash.
6/02/16: Purchased a land for future store sight and furniture and fixtures at a cost of $120,000 lump-sum by paying $40,000 cash and a 3 years note payable was signed for the balance owed. The land has a current fair value of $100,000, and furniture fair value is $50,000. (Use proportionate fair value to record the cost for each asset).
6/03/16: Purchased inventory on account at a cost of $300,000 with 2/10net30 terms. Mark up of the products for sales are at 200%.
6/03/16: Paid $60,000 for one year rent, starting June 1, 2016.
6/03/16: Paid $3,000 to an insurance company for fire and liability insurance for a one-year period beginning June 1, 2016.
6/04/16: Paid $120,000 on account for the merchandise purchased in 3.
6/05/16: Received a $10,000 refundable deposit from a major customer for special ordered products.
6/15/16: recorded Cash sales of 12,000 and credit sales of $120,000 were recorded for two weeks period (record the cost of goods sold)
6/15/16: Issued a 120 days 12% note to First National Bank for $250,000 interest payable monthly.
6/15/16: Paid wages and salaries of $32,500 gross, withholding $8,250 in Federal income taxes and $1,250 state taxes.
6/18/16: Purchased inventory on account at a cost of $180,000 with 1/10net30 terms. Mark up of the products for sales are at 200%
6/30/16: Recorded depreciation expense (DD declining Balance, with no salvage value) the furniture and fixtures for the month
6/30/16: Cash sales of 32,000 and credit sales of $180,000 were recorded for the two weeks period (record the cost of goods sold).
6/30/2016, a former employee filed a lawsuit against Stridewell alleging age discrimination and asking for damages of $500,000. Stridewell's attorney indicated that the likelihood of losing the lawsuit was possible but not probable.
6/30/16: Paid wages and salaries of $32,500 gross, withholding $8,250 in Federal income taxes and $1,250 state taxes.
6/30/16: declared a cash dividend of $5,000 to the stockholders.
Required - Complete Journal entries in General Journal, post transactions to T-accounts and prepare Trial balance.