Question

In: Accounting

ADC Studios was organized on January 1 2015. During the month the following transactions were carried...

ADC Studios was organized on January 1 2015. During the month the following transactions were carried out by ADC Studios:

Jan 01Sold capital stock to investors for $40,000.

Jan 03Paid $1200 in advance for 3 months rent of an office.

Jan 12Purchased equipment for $6,000; made a 50% cash down payment with the balance due in 30 days.

Jan 15Performed filming for a fee of $400; will be paid in 3 weeks.

Jan 18Made a payment of $500 on the equipment purchased on January 12.

1. Analyze the company’s business transactions, and prepare journal entries to record them.
2. Post the transactions to the following T accounts: Cash; Accounts Receivable; Prepaid Rent; Equipment; Accounts Payable; Stockholders Equity; Filming Revenue;
3. Summarize your balances and prepare a Trial Balance for the month of January.

Important: Present proper Journal Entries and show posting to the T Accounts.

Solutions

Expert Solution

1 Journal entries:
Date Account titles Debit Credit
Jan 01. Cash 40000
Stockholders Equity 40000
(Sold capital stock)
Jan 03. Prepaid Rent 1200
Cash 1200
(Paid rent in advance)
Jan 12. Equipment 6000
Cash (6000*50%) 3000
Accounts payable 3000
(Purchased equipment)
Jan 15. Accounts Receivable 400
Filming Revenue 400
(Performed filmimg for a fee)
Jan 18. Accounts payable 500
Cash 500
(Paid for the equipment)
2 Cash Accounts Receivable
Date Debit Date Credit Date Debit Date Credit
Jan 01. 40000 Jan 03. 1200 Jan 15. 400
Jan 12. 3000
Jan 18. 500
40000 4700
Bal. 35300
Prepaid Rent Equipment
Date Debit Date Credit Date Debit Date Credit
Jan 03. 1200 Jan 12. 6000
Accounts Payable Stockholders Equity
Date Debit Date Credit Date Debit Date Credit
Jan 18. 500 Jan 12. 3000 Jan 01. 40000
500 3000
Bal. 2500
Filming Revenue
Date Debit Date Credit
Jan 15. 400
3 Trail balamce
ADC studios
Debit Credit
Cash 35300
Accounts Receivable 400
Prepaid Rent 1200
Equipment 6000
Accounts Payable 2500
Stockholders Equity 40000
Filming Revenue 400
Totals 42900 42900

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