Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby

Exercise 73

Identifying Transactions and Preparing Journal Entries
Joel Henry founded Bookmart.com at the beginning of August, which sells new and used books online. He is passionate about books but does not have a lot of accounting experience. Help Joel by preparing journal entries for the following events. If the event is not a transaction, write "no transaction."
a. The company purchased equipment for $4,000 cash. The equipment is expected to be used for 10 or more years.
b. Joel's business bought $7,000 worth of inventory from a publisher. The company will pay the publisher within 45-60 days.
c. Joel's friend Sam lent $4,000 to the business. Sam had Joel write a note promising that bookmart.com would repay the $4,000 in four months. Because they are good friends, Sam is not going to charge Joel interest.
d. The company paid $1,500 cash for books purchased on account earlier in the month.
e. Bookmart.com repaid the $4,000 loan established in ( c ).