JOURNAL ENTRIES:
1. Purchased $180,000 of inventory on credit;
Dr. Inventory 180,000
Cr. Accounts Payable 180,000
Summary
Revenue = NONE
Expense = NONE
Liabilities = Accounts Payable = +180,000
2. Paid $60,000 in cash to their accounts payable;
Dr. Accounts Payable 60,000
Cr. Cash 60,000
Summary
Revenue = NONE
Expense = NONE
Liabilities = Accounts Payable = -60,000
3. Additional shares worth $75,000 are issued to shareholders.
Dr. Cash 75,000
Cr. Share Capital 75,000
Summary
Revenue = NONE
Expense = NONE
Liabilities = NONE
4. Sold inventory to a customer on credit for $390,000. The cost price of the inventory was
$190,000;
Dr. Accounts Receivable 390,000
Cr. Sales 390,000
Dr. Cost of Goods Sold 190,000
Cr. Inventory 190,000
Summary
Revenue = Sales = + 390,000
Expense = Cost of Goods Sold= +190,000
Liabilities = NONE
5. Collected $125,000 in cash that was owing from customers throughout the year;
Dr. Cash 125,000
Cr. Accounts Receivable 125,000
Summary
Revenue = NONE
Expense = NONE
Liabilities = NONE
6. Green Ltd prepays its insurance for the following year in advance (payment is made on 31
December each year). The prepayment made on 31 December 2021 was $13,000;
Dr. Prepaid Insurance 13,000
