The following transactions occurred during March 2021 for the Wainwright Corporation. The company owns and operates a wholesale warehouse. Issued 30,000 shares of no-par common stock in exchange for $300,000 in cash.
Purchased equipment at a cost of $40,000. $10,000 cash was paid and a notes payable to the seller was signed for the balance owed.
Purchased inventory on account at a cost of $90,000. The company uses the perpetual inventory system.
Credit sales for the month totaled $120,000. The cost of the goods sold was $70,000.
Paid $5,000 in rent on the warehouse building for the month of March.
Paid $6,000 to an insurance company for fire and liability insurance for a one-year period beginning April 1, 2021.
Paid $70,000 on account for the merchandise purchased in 3.
Collected $55,000 from customers on account.
Recorded depreciation expense of $1,000 for the month on the equipment.
Prepare journal entries to record each of the transactions listed above. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Wainwright Corporation

Journal Entries:

a. Debit Cash $300,000

Credit Common Stock $300,000

To record the issue of 30,000 shares of no-par common stock for cash.

b. Debit Equipment $40,000

Credit Cash $10,000

Credit Notes Payable $30,000

To record the purchase of equipment.

c. Debit Inventory $90,000

Credit Accounts payable $90,000

To record the purchase of inventory on account.

d. Debit Accounts receivable $120,000

Credit Sales revenue $120,000

To record the sale of goods on account.

Debit Cost of Goods Sold $70,000

Credit Inventory $70,000

To record the cost of goods sold.

Debit Rent Expense $5,000

Credit Cash $5,000

To record the rent expense for the month.

Debit Prepaid Insurance $6,000

Credit Cash $6,000

To record the prepayment of insurance for one year.

Debit Accounts payable $70,000

Credit Cash $70,000

To record the payment on account.

Debit Cash $55,000

Credit Accounts receivable $55,000

To record the collection of cash from customers.

Debit Depreciation Expense - Equipment $1,000

Credit Accumulated Depreciation - Equipment $1,000

To record the depreciation expense for the month.

Explanation:

General journal entries are used to initially record all types of transaction in the accounting records.  They form the basis for posting to the general ledger.  They also indicate the accounts to be debited or credited in the general ledger.

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