Transaction	General Journal	Debit	Credit
1	Accounts Receivable (40,000 - 20,000)	20,000
	Sales		20,000
2	Inventory (12,000 + 2,000)	14,000
	Accounts Payable		14,000
	Cost of Goods Sold	14,000
	Inventory		14,000
3	Equipment	5,000
	Small Tools Expense		5,000
	Depreciation Expense	1,000
	Accumulated Depreciation (5,000/5)		1,000
4	General Liability Insurance	1,200
	Prepaid General Liability Insurance	1,200
	Administrative Expense		2,400
5	Accounts Receivable	500
	Cash		500
6	Allowance for Doubtful Accounts	300
	Accounts Receivable (20,000*1.5%)		300
7	Payroll Expense	1300
	Cash		1300
8	Income Tax Expense	2150
	Income Tax Payable		2150

Write a written explanation for the journal entries detailing how your answer solves the problem. Your written explanation should include the codification reference to U.S. GAAP, providing the source the guidance used to solve the problem.