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

Exercise 19

Recording Journal Entries
Ryan Olson organized a new company, Me Too, Inc. The company provides networking management services on social network sites. You have been hired to record the following transactions.
a. May 1: Issued 1,000 shares of stock to investors for $30 per share.
b. May 15: Borrowed $50,000 from the bank to provide additional funding to begin operations; the note is due in two years.
c. May 31: Paid $2,400 for a one-year fire insurance policy with coverage starting June 1.
TIP : For convenience, simply record the full amount of the payment as an asset (Prepaid Insurance). At the end of June, this account will be adjusted to its proper balance. We will study this adjustment process in Chapter 4, so just leave it as Prepaid Insurance for now.
d. June 3: Purchased furniture for the store for $15,000 on account. The amount is due within 30 days.
e. June 5: Placed advertisements in local college newspapers for a total of $250 cash.
f. June 9: Sold services for $400 cash.
g. June 14: Made full payment for the furniture purchased on account on June 3.
Required:
For each of the transactions, prepare journal entries. Be sure to categorize each account as an asset (A), liability (L), stockholders' equity (SE), revenue (R), or expense (E).