P2-1A
Frontier Park was started on April 1 by C. J. Mendez and associates. The following selected events and transactions occurred during April.
Apr. 1 Stockholders invested $40,000 cash in the business in exchange for common stock.
4 Purchased land costing $30,000 for cash.
8 Incurred advertising expense of $1,800 on account.
11 Paid salaries to employees $1,500.
12 Hired park manager at a salary of $4,000 per month, effective May 1.
13 Paid $1,500 cash for a one-year insurance policy.
17 Declared and paid a $1,000 cash dividend.
20 Received $5,700 in cash for admission fees.
25 Sold 100 coupon books for $25 each. Each book contains 10 coupons that entitle the holder to one admission to the park.
30 Received $8,900 in cash admission fees.
30 Paid $900 on balance owed for advertising incurred on April 8.
Mendez uses the following accounts: Cash; Prepaid Insurance; Land; Account Payable; Unearned Admission Revenue; Common stock; Dividends; Admission Revenue; Advertising Expense; and Salaries Expense.
Instructions
Journalize the April transactions. (If there is no transaction, enter No entry as the description and 0 for the amount.)
Date Description/Account Debit Credit
Apr. 1
(Issued shares of stock for cash.)
Apr. 4
(Purchased land for cash.)
Apr. 8
(Incurred advertising expense on account.)
Apr. 11
(Paid salaries.)
Apr. 12
(Hired park manager.)
Apr. 13
(Paid for one-year insurance policy.)
Apr. 17
(Declared and paid cash dividend.)
Apr. 20
(Received cash for services provided.)
Apr. 25
(Received cash for future services.)
Apr. 30
(Received cash for services provided.)
Apr. 30
(Paid creditor on account.)
Link to Text 1Link to Text 2
To journalize the April transactions, you need to analyze each event and determine the accounts that are affected, then record the corresponding debits and credits for each transaction. Here is the journalizing of each transaction:
Apr. 1: Stockholders invested $40,000 cash in the business in exchange for common stock.
- The accounts affected are Cash and Common Stock.
- The entry would be:
Date | Description/Account | Debit | Credit
Apr. 1 | Cash | $40,000 |
Apr. 1 | Common Stock | | $40,000
Apr. 4: Purchased land costing $30,000 for cash.
- The accounts affected are Land and Cash.
- The entry would be:
Date | Description/Account | Debit | Credit
Apr. 4 | Land | $30,000 |
Apr. 4 | Cash | | $30,000
Apr. 8: Incurred advertising expense of $1,800 on account.
- The accounts affected are Advertising Expense and Account Payable.
- The entry would be:
Date | Description/Account | Debit | Credit
Apr. 8 | Advertising Expense | $1,800 |
Apr. 8 | Account Payable | | $1,800
Apr. 11: Paid salaries to employees $1,500.
- The accounts affected are Salaries Expense and Cash.
- The entry would be:
Date | Description/Account | Debit | Credit
Apr. 11 | Salaries Expense | $1,500 |
Apr. 11 | Cash | | $1,500
Apr. 12: Hired park manager at a salary of $4,000 per month, effective May 1.
- Since the park manager will start working on May 1, there is no transaction for this date.
Apr. 13: Paid $1,500 cash for a one-year insurance policy.
- The accounts affected are Prepaid Insurance and Cash.
- The entry would be:
Date | Description/Account | Debit | Credit
Apr. 13 | Prepaid Insurance | $1,500 |
Apr. 13 | Cash | | $1,500
Apr. 17: Declared and paid a $1,000 cash dividend.
- The accounts affected are Dividends and Cash.
- The entry would be:
Date | Description/Account | Debit | Credit
Apr. 17 | Dividends | $1,000 |
Apr. 17 | Cash | | $1,000
Apr. 20: Received $5,700 in cash for admission fees.
- The accounts affected are Cash and Unearned Admission Revenue.
- The entry would be:
Date | Description/Account | Debit | Credit
Apr. 20 | Cash | $5,700 |
Apr. 20 | Unearned Admission Revenue | | $5,700
Apr. 25: Sold 100 coupon books for $25 each. Each book contains 10 coupons that entitle the holder to one admission to the park.
- The accounts affected are Cash and Admission Revenue.
- The entry would be:
Date | Description/Account | Debit | Credit
Apr. 25 | Cash | $25,000 |
Apr. 25 | Admission Revenue | | $25,000
Apr. 30: Received $8,900 in cash admission fees.
- The accounts affected are Cash and Admission Revenue.
- The entry would be:
Date | Description/Account | Debit | Credit
Apr. 30 | Cash | $8,900 |
Apr. 30 | Admission Revenue | | $8,900
Apr. 30: Paid $900 on balance owed for advertising incurred on April 8.
- The accounts affected are Account Payable and Cash.
- The entry would be:
Date | Description/Account | Debit | Credit
Apr. 30 | Account Payable | $900 |
Apr. 30 | Cash | | $900
Note: In the journal entries, the debit amounts are recorded before the credit amounts for each transaction.