Question

Following are the transactions of a new company called Pose-for-Pics. Aug. 1 Madison Harris, the owner, invested $7,400 cash and $34,400 of photography equipment in the company in exchange for common stock. 2 The company paid $3,000 cash for an insurance policy covering the next 24 months. 5 The company purchased office supplies for $970 cash. 20 The company received $4,231 cash in photography fees earned. 31 The company paid $765 cash for August utilities. Required: 1. Post the transactions to the T-accounts. 2. Use the amounts from the T-accounts in Requirement (1) to prepare an August 31 trial balance for Pose-for-Pics.

Answer 1

Answer:

Pose-for-Pics

1. T-accounts:

Cash

Date     Account Title               Debit     Credit

Aug. 1   Common stock       $7,400

Aug. 2  Prepaid insurance                   $3,000

Aug. 5  Office supplies                             970

Aug. 20 Photography Fees   4,231

Aug. 31 Utilities                                         765

Aug. 31 Balance                                  $6,896

Common Stock

Date     Account Title        Debit     Credit

Aug. 1   Cash                                 $7,400

Aug. 1   Photography equipment 34,400

Aug. 31 Balance             $41,800

Photography Equipment

Date     Account Title        Debit     Credit

Aug. 1   Common stock    $34,400

Prepaid Insurance

Date     Account Title        Debit     Credit

Aug. 1   Cash                   $3,000

Office Supplies

Date     Account Title        Debit     Credit

Aug. 1   Cash                    $970

Photography Fees

Date      Account Title        Debit     Credit

Aug. 20 Cash                                 $4,231

Utilities Expense

Date     Account Title        Debit     Credit

Aug. 31 Cash                    $765

2. Trial Balance

As of August 31

Account Title          Debit     Credit

Cash                     $6,896

Common stock                   $41,800

Equipment           34,400

Prepaid insurance 3,000

Office supplies         970

Photography fees                  4,231

Utilities expense      765

Totals                $46,031   $46,031

           

Explanation:

Before transactions are posted to the T-accounts (General Ledger) they are recorded in the General Journal.  The T-accounts summarize the transactions into various ledger accounts.  Periodically, the accounts are balanced and a trial balance is extracted to check if the posting is error-free.