Described below are certain transactions of Edwardson Corporation. The company uses the periodic...

Question:

Described below are certain transactions of Edwardson Corporation. The company uses the periodic inventory system.

1. On February 2, the corporation purchased goods from Martin Company for $70,000 subject to cash discount terms of 2/10, n/30. Purchases and accounts payable are recorded by the corporation at net amounts after cash discounts. The invoice was paid on February 26.

2. On April 1, the corporation bought a truck for $50,000 from General Motors Company, paying $4,000 in cash and signing a 1-year, 12% note for the balance of the purchase price.

3. On May 1, the corporation borrowed $83,000 from Chicago National Bank by signing a $92,000 zero-interest-bearing note due 1 year from May 1.

4. On August 1, the board of directors declared a $300,000 cash dividend that was payable on September 10 to stockholders of record on August 31.

Required:

Make all the journal entries necessary to record the transactions above using appropriate dates.

Journal Entry:

A properly recorded financial transaction will include the date of the transaction, debit account and credit account, transaction reference number, the total debit amount, and total credit account.

Answer and Explanation: 1

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Required journal entries are shown below.

Edwardson Corporation

Journal Entries

DateParticularsDebit ($)Credit ($)Calculation
Feb. 2Purchases68,60...

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Journal Entries and Trial Balance in Accounting

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Chapter 3 / Lesson 10
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Discover the meaning of a journal entry and a trial balance, types of journal entries, how a general ledger differs from a trial balance, and some examples.


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