Express the Following Transactions of Forman's Store, Inc

question 66

Essay

Express the following transactions of Forman's Store, Inc., in journal entry form.If an entry is not required, indicate the reason.You may omit explanations for the journal entries.
The store:
(1) Receives $35,000 from John Forman in return for 1,000 shares of the firm's $35 par
value common stock.
(2) Gives a 60-day, 8% note to a bank and receives $8,000 cash from the bank.
(3) Rents a building and pays the annual rental of $11,000 in advance.
(4) Acquires display equipment costing $7,000 and issues a check in full payment.
(5) Acquires merchandise inventory costing $22,000.The firm issues a check for $12,000,
with the remainder payable in 30 days.
(6) Signs a contract with a nearby restaurant under which the restaurant agrees to purchase
$1,500 of groceries each week.The firm receives a check for the first two weeks'
orders in advance.
(7) Obtains a fire insurance policy providing $50,000 coverage beginning next month.It
pays the one-year premium of $1,440.
(8) Pays $625 for advertisements that will appear in newspapers next month.
(9) Places an order with suppliers for $43,500 of merchandise to be delivered next month.

Recognize the application and requirements of promissory estoppel within contract law.

Identify the factors influencing the sufficiency of consideration in contracts.

Distinguish between illusory and actual promises and their significance in contract formation.

Grasp the concept of adequacy of consideration and its relevance in court evaluations of contracts.

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Definitions:

Relevant Range

The range of activity within which the assumptions about variable and fixed cost behavior are valid.

Comparative Income Statements

Financial statements that present the revenues, expenses, and net incomes of a business for multiple periods side by side for comparison.

Merchandising Company

A merchandising company is a business that purchases finished goods for resale, making profits through buying and selling rather than manufacturing.

Relevant Range

This concept in accounting refers to the span of activity or volume levels within which the assumptions about cost behavior are valid.