Question

Oct 1 Tom invested cash in the business, $40,000 2 Prepaid 6 months rent in advance, $4,800 3 Purchased Stage Equipment for $3,000. Paid $1,500 immediately but put the rest on account. 5 Purchased supplies for cash, $1,500 7 Purchased a one year insurance policy for $1,200 31 Paid the part-time worker, $450 Nov 2 Tom withdrew $180 so he could relax at the health spa 3 Tuition revenue for the month was, $3,500. Received $1,000 immediately from students the rest is due in 20 days. 8 Paid the telephone bill, $95 11 Paid the electric bill, $320 21 Received payment for tuition from students billed on November 3 23 Received the newspaper advertising bill, $160, it is due in 30 days. 27 Paid the part-time worker, $450 Dec 3 Tuition revenue for the month was, $5,500. Received $2,500 immediately from students, the rest is due in 20 days. 21 Paid the advertising bill which was received last month, $160 22 Received payment for tuition from students billed on December 3 24 Paid an additional $500 on the stage equipment purchased earlier in the year. 29 Purchased additional supplies on account, $300

Answer 1

Journal Entries

Date	Account Names	Debit ($)	Credit ($)
Oct 1	Cash	40000
	Tom's Capital		40000
	(Tom invested in the business in cash)
Oct 2	Prepaid rent	4800
	Cash		4800
	(Rent for 6 months not incurred, paid)
Oct 3	Stage equipment	3000
	Cash		1500
	Accounts payable		1500
	(Stage equipment equipment purchased partially on account and partially on cash)
Oct 7	Prepaid insurance	1200
	Accounts payable		1200
	(Purchase of 1 year insurance policy. Since the insurance expense had not been incurred it will do to prepaid insurance account. It is credited to accounts payable because no cash payment is said to be made.)
Oct 31	Wages	450
	Cash		450
	(Payment made to part-time worker)
Nov 2	Tom's Drawings	180
	Cash		180
	(Tim withdrew cash for personal reasons. Tom's drawings account will be credited and Tom's Capital account will be debited at the end of the year to show the effect of withdrawal on his capital)
Nov 3	Cash	1000
	Accounts receivable	2500
	Tuition revenue		3500
	(Tuition revenue recognised. Cash receipt of $1000 and balance debited to accounts receivable)
Nov 8	Telephone expenses	9511
	Electricity expenses	320
	Cash(9511+320)		9831
	(Telephone bill and electricity bill paid)
Nov 21	Cash	2500
	Accounts receivable		2500
	(Balance of tuition revenue on Nov 3 recieved in cash)
Nov 23	Advertising expense	160
	Accounts receivable		160
	(Newspaper advertising bill received. On receipt of Bill, the expense is to be recognised then itself even though payment is due in 30 days)
Nov 27	Wages	450
	Cash		450
	(Part time worker paid)
Dec 3	Cash	2500
	Accounts receivable	3000
	Tuition revenue		5500
	(Tuition revenue recognised. $2500 received immediately in cash, balance $3000 debited to accounts receivable)
Dec 21	Accounts payable	160
	Cash		160
	(Advertisement expenses of Nov 23 paid)
Dec 22	Cash	3000
	Accounts receivable		3000
	(Balance tuition revenue of $3000 received in cash)
Dec 24	Accounts payable	500
	Cash		500
	(Additional $500 paid for stage equipment bought on Oct 3)
Dec 29	Supplies in hand	300
	Accounts payable		300
	(Supplies purchased on account for $300)