Question

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

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

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

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

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

Jan 18​Made 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.

Answer 1

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