Question

Following are the transactions of a new company called Pose-for-Pics. Aug. 1 Madison Harris, the owner, invested $6,500 cash and $33,500 of photography equipment in the company in exchange for common stock. 2 The company paid $2,100 cash for an insurance policy covering the next 24 months. 5 The company purchased office supplies for $880 cash. 20 The company received $3,331 cash in photography fees earned. 31 The company paid $675 cash for August utilities. Prepare general journal entries for the above transactions.

Answer 1

Answer and Explanation:      

The general journal entries are shown below:

On Aug 1

Cash Dr $6,500

Equipment $33,500

           To Common stock $40,000

(Being the invested amount is recorded)

For recording this we debited the cash and equipment as it increased the assets and at the same time it also increased the stockholder equity so common stock is credited

On Aug 2

Prepaid insurance Dr $2,100

        To cash $2,100

(Being the cash paid is recorded)

For recording this we debited the prepaid insurance as it increased the assets and at the same time it also decreased the assets so cash is credited

On April 5

Office supplies Dr $880

         To cash $880

(Being the office supplies purchased for cash is recorded)

For recording this we debited the office supplies as it increased the assets and at the same time it also decreased the assets so cash is credited

On April 20

Cash Dr $3,331

      To Fess earned $3,331

(Being cash earned is recorded)

For recording this we debited the cash as it increased the assets and at the same time it also increased the revenue so fees earned is credited

On April 31

Utilities expense $675

      To Cash $675

(Being the utilities expense paid)

For recording this we debited the utilities expense as it increased the expense and at the same time it also decreased the assets so cash is credited