Sawyer Case

In: Business and Management

Submitted By alaliasyao0328
Words 597
Pages 3
Sawyer Case (A)
The Sawyer Company incorporated on January 1, 2013 as a wholesaler. It purchases products from suppliers and resells the inventory to commercial customers. During 2013, Sawyer engaged in various transactions. A subset of these transactions is listed below. Date | Transaction | 1/1 | Various shareholders invest in Sawyer by purchasing 2,000 shares of no-par stock at $10 per share. | 1/16 | Sawyer purchases 2 acres of land as a building site, paying $1,500 per acre. | 3/30 | Sawyer purchases a building and equipment for $15,320 and $2,120, respectively. The purchases are paid for with both cash (60% of the total cost) and a note payable (40% of the total cost). | 3/31 | Sawyer purchases $7,300 of inventory on credit from the Bark Company. | 4/8 | Sawyer pays $7,300 cash for inventory purchased from Bark on 3/31. | 6/1 | Sawyer sells one its acres of land for $1,500 cash after reconsidering its building plans. | 9/23 | Sawyer makes sales on credit to Frank Company for $5,000 and $4,000 to Knox company. The original cost of the inventory was $5,400. | 11/2 | Sawyer collects $2,000 of accounts receivable from Frank Company. | 12/29 | Sawyer distributes dividends of $500 ($0.25 per share for 2,000 shares) to shareholders. |

Required: 1) For the transactions listed above, prepare the appropriate journal entries. 2) For the transactions listed above, post the entries to the T-Accounts. 3) Verify that the accounting equation remains in balance after considering all transactions. Solutions:
1) Journal Entries: Date | Account | Debit/$ | Credit/$ | 1/1 | Cash (+A) | 20,000 | | | Common Stock (+SE) | | 20,000 | | 1/16 | Land (+A) | 3,000 | | | Cash (-A) | | 3,000 | | 3/30 | Building (+A) | 15,320 | | | Equipment (+A) | 2,120 | | | Cash (-A) | | 10,464 | | Note payable (+L) | | 6,976 |…...

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