Question

Ivanhoe Crusher is a licensed CPA. During the first month of operations of her business (a sole proprietorship), the following events and transactions occurred.

April 2		Invested $26,320 cash and equipment valued at $11,370 in the business.
2		Hired an administrative assistant at a salary of $346 per week payable monthly.
3		Purchased supplies on account $802. (Debit an asset account.)
7		Paid office rent of $532 for the month.
11		Completed a tax assignment and billed client $950 for services rendered. (Use Service Revenue account.)
12		Received $3,325 advance on a management consulting engagement.
17		Received cash of $1,856 for services completed for Ferengi Co.
21		Paid insurance expense $110 for the next month.
30		Paid administrative assistant $1,384 for the month.
30		A count of supplies indicated that $122 of supplies had been used.
30		Purchased a new computer for $6,019 with personal funds. (The computer will be used exclusively for business purposes.)

Journalize the transactions in the general journal. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.

Answer 1

In the given case, the owner has contributed the cash and equipments which will be treated as capital contribution for the business.

Further the appointment of the Administrative assistant has no impact on the business, as expenses is neither accriued nor paid, it will have journal when it is actually paid.

When the payment is in advance it is prepaid, and if revenue is received in advance it is treated as unearned service revenue.

The journal entry will be as follows:

Date	Accounts and Explanation	Debit	Credit
April .2	Cash	$26,320
	Equipment	$11,370
	Owner's capital		$37,690
	( To record owners capital introduction)
April .2	No Entry	$0
	No Entry		$0
April .3	Supplies	$802
	Accounts Payable		$802
	( To record purchase of supplies on account)
April .7	Rent Expenses	$532
	Cash		$532
	( To record payment of Rent expenses)
April.11	Accounts Receivable	$950
	Service revenue		$1,620
	( To record bill of service revenue )
April .12	Cash	$3,325
	Unearned service revenue		$3,325
	( To record advance received for service)
April .17	Cash	$1,856
	Service revenue		$1,856
	( To record receipt of service)
April .21	Prepaid Insurance	$110
	Cash		$110
	( To record prepayment of insurance for next month)
April .30	Salary Expenses	$1,384
	Cash		$1,384
	( To record payment of salary for the months)
April .30	Supplies expenses	$122
	Supplies		$122
	( To record usage of supplies)
April .30	Computer	$6,019
	Owner's capital		$6,019
	( To record purchase of computer from personal fund)