Three former college classmates decided to open a store near campus to sell wireless equipment to students. They created a public company, The Wire, and issued stock to interested investors. They plan on creating monthly financial statements.

Required: Several transactions occurred in March. Each is described separately in this folder. For each transaction, indicate the accounts for The Wire that are affected, whether they increase or decrease, and the amount of the increase or decrease.

Transaction 1

On March 1, the three classmates opened a checking account for The Wire at a local bank. They each deposited $21,000 in exchange for shares of stock. A few of their friends also purchased stock for $11,000 that was deposited in The Wire account. [Note: Combine both transactions into one entry.]

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Transaction 2

The company quickly acquired $45,000 in inventory, 60% of which was paid for in cash. The rest was acquired on open accounts that were payable after 30 days.

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Transaction 3

A one-year store rental lease was signed on March 1 for $1,200 per month, and rent for the first 4 months was paid in advance. [Note: Record the complete entry for the March 1 transaction first, and the complete March 31 adjusting entry second.]

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Transaction 4

The owners paid $2,000 for website advertising. They were able to get a good deal because one of the company's owners also owns stock in the website company. The owners also paid $6,500 for some advertising in local newspapers. [Note: Combine both transactions into one entry.]

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Transaction 5

Sales were $80,000. Cost of merchandise sold was 65% of sales. 65% of sales were on open account. [Note: Record the complete sales entry first, and the complete expense entry second.]

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Transaction 6

Wages and salaries in March were $11,500, of which $8,200 was actually paid to employees.

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Transaction 7

Miscellaneous expenses were $1,000, all paid for with cash.

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Transaction 8

On March 1, fixtures and equipment were purchased for $4,000 with a downpayment of $2,000 and a $2,000 note, payable in one year. Interest of 4% per year was due when the note was repaid. The estimated life of the fixtures and equipment is 8 years with no expected salvage value. [Note: Record the complete March 1 entry for the equipment purchase first, the complete March 31 depreciation adjusting entry second, and the complete March 31 interest adjusting entry third.]

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Transaction 9

Cash dividends totaling $4,000 were paid to stockholders on March 31.

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