Question 2

The following transactions occurred for Mouawad Inc:

1. Inventory costing $300,000 was purchased on account.

2. A new vehicle costing $30,000 was purchased. Mouawad paid $5,000 as a down payment, and the remaining $25,000 was financed through a bank loan.

3. Surplus land was sold for $80,000, which was $20,000 more than its original cost.

4. During the year, the company made a payment of $20,000 on its mortgage payable;

$2,500 of this amount was for the interest on the debt.

5. Wages of $45,000 were charged to expense as they were incurred. No wages were owing to the employees at the end of the year.

6. The company declared and paid dividends of $30,000.

Required

For each of the above items:

• Provide the journal entry
• State whether cash increases, decreases, or stays the same
• State whether it pertains to operating, investing or financing activities

1. Inventory transaction

	Dr.	Cr.

Circle one:	Cash increases	Cash decreases	Cash stays the same
Circle one:	Operating Activity	Investing Activity	Financing Activity

2. Vehicle transaction

	Dr.	Cr.

Circle one:	Cash increases	Cash decreases	Cash stays the same
Circle one:	Operating Activity	Investing Activity	Financing Activity

3. Land transaction

	Dr.	Cr.

Circle one:	Cash increases	Cash decreases	Cash stays the same
Circle one:	Operating Activity	Investing Activity	Financing Activity