Ryan Terlecki organized a new Internet company, CapUniverse, Inc. The company specializes in baseball-type caps with logos printed on them. Ryan, who is never without a cap, believes that his target market is college and high school students. You have been hired to record the transactions occurring in the first two weeks of operations. a. Issued 2,700 shares of $0.01 par value common stock to investors for cash at $27 per share.
b. Borrowed $68,000 from the bank to provide additional funding to begin operations; the note is due in two years.
c. Paid $1,150 for the current month's rent of a warehouse and another $1,150 for next month's rent.
d. Paid $1,800 for a one-year fire insurance policy on the warehouse (recorded as a prepaid expense).
e. Purchased furniture and fixtures for the warehouse for $10,000, paying $3,000 cash and the rest on account. The amount is due within 30 days.
f. Purchased for $3,200 cash The University of Pennsylvania, Notre Dame, The University of Texas at Austin, and Michigan State University baseball caps as inventory to sell online.
g. Placed advertisements on Google for a total of $250 cash.
h. Sold caps totaling $2,300, half of which was charged on account. The cost of the caps sold was $1,500. (Hint: Make two entries.)
i. Made full payment for the furniture and fixtures purchased on account in (e).
j. Received $250 from a customer on account.

Required:
For each of the transactions, prepare journal entries.

Entries and their narrations are posted below

Explanation:

We will record assets and expenses on the debit as they increase during the year and will record liabilities and capital on the credit side as they increase during the year or vice versa.

a. Issued 2,700 shares of $0.01 par value common stock to investors for cash at $27 per share

Dr Cash (2700 x $27)            72,900

Cr Common stock                     27

Cr Additional paid-in capital   72,873

b. Borrowed $68,000 from the bank to provide additional funding to begin operations; the note is due in two years.

Dr Cash                        $68,000

Cr Notes payable       $68,000

c. Paid $1,150 for the current month's rent of a warehouse and another $1,150 for next month's rent.

Dr Warehouse rent   $1,150

Dr Prepaid rent          $1,150

Cr  Cash                     $2,300

d. Paid $1,800 for a one-year fire insurance policy on the warehouse

Dr  Prepaid insurance    $1,800

Cr  Cash                           $1,800

e. Purchased furniture and fixtures for the warehouse for $10,000, paying $3,000 cash and the rest on account.

Dr furniture and fixture     $10,000

Cr  Cash                               $3,000

Cr  Account payable           $7,000

f. Purchased inventory  for $3,200 cash

Dr Inventory  $3,200

Cr  Cash         $3,200

g. Placed advertisements on Google for a total of $250 cash.

Dr Advertisement expense  $250

Cr Cash                                  $250

h. Sold caps totaling $2,300, half of which was charged on account. The cost of the caps sold was $1,500.

Dr Cash                           $1,150

Dr Account receivable  $1,150

Cr Caps revenue            $2,300

Dr Cost of goods sold $1,500

Cr Inventory                  $1,500

i. Made full payment for the furniture and fixtures purchased on account

Dr account payable $7,000

Cr Cash                         $7.000

j. Received $250 from a customer on account.

Dr cash $250

Cr account receivable $250

c, theres a double tax on the business earnings

definitely a