On Jan. 2, Callie Taylor invests $40,000 into the business in exchange for common stock. She journalized the transaction as follows but something is wrong with the journal entry. Use your knowledge of what a correct journal entry should look like to identify everything that is wrong. Select all answers which apply.
Date

Accounts

PR

Debit

Credit

Jan 2

Common Stock

40,000

Cash

4,000

(Owner invested in business)

The dollar amount is wrong in the Credit column

Common Stock should be listed below Cash

The Cash account should be listed first

The Common Stock account should be indented as it is credited

$ signs should be included in the Debit and Credit columns

On behalf of the business the entry will be as follow:

 Accounts         PR         Dr.          Cr.

                                        $             $

Cash                           40,000

Common Stock                        40,000

Explanation:

As an Investor in the business Callie will not include common stock in her Journal entry and make a debit entry in this account. She also paid the cash against investment in the business so the cash will be credited. She will pass following entry.

Accounts         PR         Dr.          Cr.

                                        $             $

Investment                40,000

Cash                                         40,000

On behalf of the business the entry will be as follow:

 Accounts         PR         Dr.          Cr.

                                        $             $

Cash                           40,000

Common Stock                        40,000

*Assuming that the stock is issued on the par value otherwise the share par value and number of share data are needed which are missing in the question.

two years ago, when picking flowers in the mountains back of yosemite valley, i found a book. it was blotted and storm-beaten; all of its outer pages were mealy and crumbly. the paper seemed to dissolve like the snow beneath which it had been buried, however; many of the inner pages were well preserved. and although all were more or less stained and torn, whole chapters were easily readable. this is the condition of the great open book of yosemite glaciers today; its granite pages have been torn and blurred by the same storms that wasted the castaway book.

two years ago, when picking flowers in the mountains back of yosemite valley; i found a book. it was blotted and storm-beaten, all of its outer pages were mealy and crumbly. the paper seemed to dissolve like the snow beneath which it had been buried, however, many of the inner pages were well preserved. and although all were more or less stained and torn; whole chapters were easily readable. this is the condition of the great open book of yosemite glaciers today, its granite pages have been torn and blurred by the same storms that wasted the castaway book.