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).