The following transactions occurred during the month of June 2021 for the Stridewell Corporation. The company owns and operates a retail shoe store.
1. Issued 130,000 shares of common stock in exchange for $650,000 cash.
2. Purchased office equipment at a cost of $106,250. $42,500 was paid in cash and a note payable was signed for the balance owed.
3. Purchased inventory on account at a cost of $260,000. The company uses the perpetual inventory system.
4. Credit sales for the month totaled $442,000. The cost of the goods sold was $221,000.
5. Paid $5,750 in rent on the store building for the month of June.
6. Paid $3,120 to an insurance company for fire and liability insurance for a one-year period beginning June 1, 2021.
7. Paid $187,850 on account for the merchandise purchased in 3.
8. Collected $88,400 from customers on account.
9. Paid shareholders a cash dividend of $6,500.
10. Recorded depreciation expense of $2,125 for the month on the office equipment.
11. Recorded the amount of prepaid insurance that expired for the month.
Required:
1. Prepare journal entries to record each of the transactions and events listed above. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

1.

Cash (Dr.)                       $130,000

Stock Capital (Cr.)          $130,000

2.

Office Equipment (Dr.)              $106,250

Cash (Cr.)                                   $42,500

Notes Payable (Cr.)                   $63,750

3.

Inventory (Dr.)                            $260,000

Accounts Payable (Cr.)              $260,000

4.

Accounts Receivables (Dr.)          $442,000

Sales (Cr.)                                      $442,000

Cost of Goods Sold (Dr.)               $221,000

Inventory (Cr.)                                $221,000

5.

Rent Expense (Dr.)                     $5,750

Cash (Cr.)                                    $5,750

6.

Prepaid Insurance (Dr.)              $3,120

Cash (Cr.)                                    $3,120

7.

Accounts Payable (Dr.)              $187,850

Cash (Cr.)                                    $187,850

8.

Cash (Dr.)                                   $88,400

Accounts Receivables (Cr.)      $88,400

9.

Retained Earnings (Dr.)            $6,500

Cash (Cr.)                                  $6,500

10.

Depreciation Expense (Dr.)           $2,125

Allowance for depreciation (Cr.)   $2,125

11.

Insurance Expense (Dr.)             $260

Prepaid Insurance (Cr.)              $260

Explanation:

1. Cash is debited and Capital is credited because shares are issued on cash.

2. Office Equipment is debited and cash and notes payable are credited which is termed as current liability.

3. Inventory is debited and accounts payable is credited as current liability.

4. Sales is credited and accounts receivable is debited which is current asset.

5. Rent expense is debited and cash is credited.

6. Prepaid insurance is debited because the insurance is paid for the whole year.

7. Cash is credited and accounts payable is debited to show payment of transaction 3.

8. Cash is received from customers for the sales made. Cash is debited and accounts receivables is credited.

9. Dividend is paid to shareholders in cash which is credited and Retained earnings are debited.

10. Depreciation expense is debited and allowance for depreciation is credited.

11. Prepaid Insurance is expired for one month for which adjusting entry is made.

there was no passage listed but using the process of elimination i'd say it was d. the high economy would do the opposite. i don't see how low prices would affect it. high unemployment is possible but i feel d is the better answer.