Prepare Journal Entries to Record the Following Transactions of Daisy

question 71

Essay

Prepare journal entries to record the following transactions of Daisy King Ice Cream Company. If an entry is not required, state "No Entry."
1. Started business by issuing 10,000 shares of capital stock for $20,000.
2. Signed a franchise agreement to pay royalties of 5% of sales.
3. Leased a building for three years at $500 per month and paid six months' rent in advance.
4. Purchased equipment for $5,400, paying $1,000 down and signing a two-year, 10% note for the balance.
5. Purchased $1,800 of supplies on account.
6. Recorded cash sales of $800 for the first week.
7. Paid weekly wages, $320.
8. Paid for supplies purchased in item (e).
9. Paid royalties due on first week's sales.
10. Recorded depreciation on equipment, $50.

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Definitions:

Retained Earnings

Profits of a company that are not distributed as dividends but are instead reinvested in the business or kept as reserve.

Par Value

The face value of a bond or the stated value of a share of stock, as assigned by the issuing company.

Book Value

The worth of an asset as indicated by its balance sheet account balance, which considers the asset's original cost less any depreciation, amortization, or impairment charges.

Dividends in Arrears

Unpaid dividends on preferred stock that accumulate until paid by the corporation, often before any dividends can be paid on common stock.