80.2K

Verified Solution

Link Copied!

See the attached picture

E4.18 (LO 3, 4) Rahal and Watson, a small manufacturing company, entered into the following cash transactions during January 2020:

1. Issued 800 shares of common stock for $30 each.

2. Collected $3,900 on outstanding accounts receivable.

3. Paid payroll for the month of January of $1,530.

4. Purchased property for $12,000 cash.

5. Paid a $6,000 dividend.

6. Sold an equipment with a book value of $5,000 for $7,000 cash.

7. Paid $2,000 to the bank: $900 to reduce the principal on an outstanding loan and $1,100 as an interest payment for interest incurred during the month of January.

8. Paid $5,000 for miscellaneous expenses incurred during the month of January.

a. Prepare a journal entry for each transaction. Indicate the classification and the effect on the accounting equation.

b. Prepare a cash T-account, and compute the companys cash balance as of the end of January. Assume a beginning balance of $4,000.

E4.18 (L0 3, 4) Rahal and Watson, a small manufacturing company, entered into the following cash transactions during January 2020: 1. Issued 800 shares of common stock for $30 each. 2. Collected $3,900 on outstanding accounts receivable. 3. Paid payroll for the month of January of $1,530. 4. Purchased property for $12,000 cash. 5. Paid a $6,000 dividend. 6. Sold an equipment with a book value of $5,000 for $7,000 cash. 7. Paid $2,000 to the bank: $900 to reduce the principal on an outstanding loan and $1,100 as an interest payment for interest incurred during the month of January. 8. Paid $5,000 for miscellaneous expenses incurred during the month of January. a. Prepare a journal entry for each transaction. Indicate the classification and the effect on the accounting equation. b. Prepare a cash T-account, and compute the company's cash balance as of the end of January. Assume a beginning balance of $4,000

Answer & Explanation Solved by verified expert

See Answer