The following transactions occurred during the January month:Received $50,000 cash from customers on 1/1 for subscriptions that had already been earned and charged on account in 2020.Purchased 10 new computer servers for $33,500 on 1/2; paid $10,000 cash and signed a three-year note for the remainder owed.Paid $10,000 for an Internet advertisement that ran today on 1/3.On January 4, purchased and received $3,000 of supplies on account.Received $170,000 cash on 1/5 from customers for service revenue earned but not previously recorded in January.On January 6, paid $3,000 cash for supplies purchased on January 4.On January 7, sold 15,000 subscriptions at $15 each for services provided during January. Half was collected in cash and half was sold on account.Paid $378,000 in wages to employees on 1/30 for work done in January.On January 31, received an electric and gas utility bill for $5,350 for January utility services. The bill will be paid in February.
Question
The following transactions occurred during the January month:Received 33,500 on 1/2; paid 10,000 for an Internet advertisement that ran today on 1/3.On January 4, purchased and received 170,000 cash on 1/5 from customers for service revenue earned but not previously recorded in January.On January 6, paid 15 each for services provided during January. Half was collected in cash and half was sold on account.Paid 5,350 for January utility services. The bill will be paid in February.
Solution
Here is a step-by-step breakdown of the transactions:
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On January 1, the company received $50,000 cash from customers for subscriptions that had already been earned and charged on account in 2020. This would increase the company's cash account and decrease its accounts receivable.
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On January 2, the company purchased 10 new computer servers for 10,000 cash and signed a three-year note for the remainder owed. This would decrease the company's cash account by 23,500, and increase its property, plant, and equipment account by $33,500.
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On January 3, the company paid $10,000 for an Internet advertisement that ran today. This would decrease the company's cash account and increase its advertising expense.
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On January 4, the company purchased and received $3,000 of supplies on account. This would increase the company's supplies account and increase its accounts payable.
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On January 5, the company received $170,000 cash from customers for service revenue earned but not previously recorded in January. This would increase the company's cash account and increase its service revenue.
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On January 6, the company paid $3,000 cash for supplies purchased on January 4. This would decrease the company's cash account and decrease its accounts payable.
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On January 7, the company sold 15,000 subscriptions at 112,500, increase its accounts receivable by 225,000.
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On January 30, the company paid $378,000 in wages to employees for work done in January. This would decrease the company's cash account and increase its wages expense.
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On January 31, the company received an electric and gas utility bill for $5,350 for January utility services. The bill will be paid in February. This would increase the company's utilities expense and increase its accounts payable.
Similar Questions
Received $50,000 cash from customers on 1/1 for subscriptions that had already been earned and charged on account in 2020.
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A supplier offers a company terms 3/10, n/30 for a $10,000 purchase on account on January 1. The company uses a perpetual inventory system to record transactions. If the company makes the payment on January 10, the entry to record the payment will include a:Multiple ChoiceDebit to Accounts Payable for $300Credit to Inventory for $300Debit to Accounts Payable for $9,700Credit to Cash for $10,000
A company purchased $3,200 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $900 worth of merchandise. On July 12, it paid the full amount due. Assuming the company uses a perpetual inventory system, and records purchases using the gross method, the correct journal entry to record the payment on July 12 is:Multiple ChoiceDebit Merchandise Inventory $2,300; credit Cash $2,300.Debit Cash $2,300; credit Accounts Payable $2,300.Debit Accounts Payable $2,300; credit Merchandise Inventory $46; credit Cash $2,254.Debit Accounts Payable $3,200; credit Cash $3,200.Debit Accounts Payable $2,300; credit Cash $2,300.
A $20 000 machine is purchased by paying $5000 cash and agreeing to pay for the remainder in 30 days’ time, the journal entry should include a: Group of answer choices credit to Accounts Payable. debit to Cash. credit to Revenue. credit to Machinery.
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