Answer to Question #217023 in Accounting for zuby

Question

The following events occurred during the month of May for McLain Company.

1.

McLain sells 240 units for $20 each. McLain collects cash for 200 of these units. The units cost McLain $8 each to purchase.

2.

McLain purchases $1,800 worth of inventory on account.

3.

McLain collects $500 in cash on its A/R.

4.

McLain takes out a loan for $400.

5.

McLain pays out $350 cash in dividends.

6.

McLain receives a contribution of $600 from its owners.

7.

McLain purchased a new piece of equipment. The new equipment cost $1,000 and was paid for in cash.

8.

McLain pays $500 of its accounts payable.

9.

McLain incurs $500 in salaries expense, but will not pay workers until next month.

10.

McLain incurs $300 in rent expense and pays it in cash.

11.

McLain prepays $200 in cash for insurance.

12.

Taxes, paid in cash, are $110.

Required:

1.

Prepare journal entries for the above transactions.

2.

Complete the T-accounts below

1. prepare trail balance

Answer 1

1. McLain sells 240 units for $20 each. McLain collects cash for 200 of these units. The units cost McLain $8 each to purchase.

2. McLain purchases $1,800 worth of inventory on account.

3. McLain collects $500 in cash on its A/R.

4. McLain takes out a loan for $400.

5. McLain pays out $350 cash in dividends.

6. McLain receives a contribution of $600 from its owners.

7.. McLain purchased a new piece of equipment. The new equipment cost $1,000 and was paid for in cash.

8. McLain pays $500 of its accounts payable.

9. McLain incurs $500 in salaries expense, but will not pay workers until next month.

10. McLain incurs $300 in rent expense and pays it in cash.

11. McLain prepays $200 in cash for insurance.

12. Taxes, paid in cash, are $110.

1. Prepare journal entries for the above transactions.

2. Complete the T-accounts below

1. prepare trail balance