I need help with my accounting homework. I do not know what to debit or credit.
Asked Apr 18, 2017, 12:39 PM
1. March 1: Sarah purchased a building for $400,000 using $20,000 cash and then borrowing the rest from the bank. The loan from the bank will be paid off over the next 10 years (1/10 of the principal will be paid off at the end of each year). The loan carries an interest rate of 7.72%. Interest accrued will be paid off at the end of every year. The building has an expected life of 24 years and will be depreciated using the straight-line method.
2. March 1: Sarah paid in advance for a 10-month insurance policy, which will begin today. She paid $3,000 for the policy.
3. March 2: Sarah purchased 10 bikes from Bob's Biker Shop. Each bike cost $5,500 and the credit terms are 2/10, n/20. (Note: Bikes are considered inventory)
4. March 2: Bob's Biker Shop paid UPS $4,058 cash to ship the bikes to Sarah.
5. March 3: Sarah hires Biker Bob for promotional purposes. She estimates his salary to be $10/hour/. He will probably work 8 hours this month.
6. March 5: Sarah sold to bikes to Bold and the Beautiful Biker's for $6,000 each with credit terms of 2/10, n/30.The total cost of the bikes was figured out to be $50,000.
7. March 6: Sarah paid FedEx $3500 cash to ship the bikes to Bold and Beautiful Bikers.
8. March 8: Stockholders invest $150,000 into the company in exchange for Sarah's Bikes common stock.
9. March 10: Sarah paid off the balance due from Bob's Biker Shop.