Question

karla tanner opened a web consulting business called linkworks and completed the following transactions in its first month of operations. april 1 tanner invested $125,000 cash along with office equipment valued at $30,000 in the company in exchange for common stock. april 2 the company prepaid $7,200 cash for 12 months’ rent for office space. hint: debit prepaid rent for $7,200. april 3 the company made credit purchases for $15,000 in office equipment and $3,000 in office supplies. payment is due within 10 days. april 6 the company completed services for a client and immediately received $2,000 cash. april 9 the company completed a $10,000 project for a client, who must pay within 30 days. april 13 the company paid $18,000 cash to settle the account payable created on april 3. april 19 the company paid $6,000 cash for the premium on a 12-month prepaid insurance policy. hint: debit prepaid insurance for $6,000. april 22 the company received $8,000 cash as partial payment for the work completed on april 9. april 25 the company completed work for another client for $2,640 on credit. april 28 the company paid a $6,200 cash dividend. april 29 the company purchased $1,000 of additional office supplies on credit. april 30 the company paid $700 cash for this month’s utility bill. required: 1. prepare general journal entries to record these transactions using the following titles: cash (101); accounts receivable (106); office supplies (124); prepaid insurance (128); prepaid rent (131); office equipment (163); accounts payable (201); common stock (307); dividends (319); services revenue (403); and utilities expense (690). 2. post the journal entries from part 1 to the ledger accounts. 3. prepare a trial balance as of april 30.

Answer 1

The general  journal entries to record these transactions are: Debit Cash  $125,000, Debit Office equipment $30,000, Credit Common stock   $155,000.

Journal entries

Karla tanner journal entries

1-Apr

Debit Cash  $125,000

Debit Office equipment  $30,000

Credit Common stock   $155,000

($125,000+$30,000)

(To record the investment in cash)

2-Apr

Debit Prepaid rent  $7,200

Credit Cash   $7,200

(To record the cash prepaid as rent)

 

3-Apr

Debit Office equipment  $15,000

Debit Office supplies  $3,000

Credit Accounts payable   $18,000

($15,000+$3,000)

(To record the purchase of office equipment and office supplies )

6-Apr

Debit Cash  $2,000

Credit Service revenue   $2,000

(To record the receipt of cash)

 

9-Apr

Debit Accounts receivable  $10,000

Credit Service revenue   $10,000

(To record  services revenue)  

13-Apr

Debit Accounts payable $18,000

Credit Cash   $18,000

(To record accounts payable )

 

19-Apr

Debit Prepaid insurance  $6,000

Credit Cash   $6,000

(To record the cash prepaid as insurance)  

22-Apr

Debit Cash  $8,000

Credit Accounts receivable   $8,000

(To record account receivable)

25-Apr

Debit Accounts receivable  $2,640

Credit Service revenue   $2,640

(To record the services revenue)  

28-Apr

Debit Dividend  $6,200

Credit Cash   $6,200

(To record the cash paid as dividend)  

29-Apr

Debit Office supplies  $1,000

Credit Accounts payable   $1,000

(To record the purchase of office supplies)  

30-Apr

Debit Utilities expense  $700

Credit Cash   $700

(To record cash)

Therefore the general  journal entries to record these transactions are: Debit Cash $125,000, Debit Office equipment $30,000, Credit Common stock $155,000.

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