Question

Karla Tanner opened a web consulting business called Linkworks and recorded the following transactions in its first month of operations. Apr. 1 Tanner invests $80,000 cash along with office equipment valued at $26,000 in the company. Apr. 2 The company prepaid $9,000 cash for twelve months’ rent for office space. The company's policy is record prepaid expenses in balance sheet accounts. Apr. 3 The company made credit purchases for $8,000 in office equipment and $3,600 in office supplies. Payment is due within 10 days. Apr. 6 The company completed services for a client and immediately received $4,000 cash. Apr. 9 The company completed a $6,000 project for a client, who must pay within 30 days. Apr. 13 The company paid $11,600 cash to settle the account payable created on April 3. Apr. 19 The company paid $2,400 cash for the premium on a 12-month insurance policy. The company's policy is record prepaid expenses in balance sheet accounts. Apr. 22 The company received $4,400 cash as partial payment for the work completed on April 9. Apr. 25 The company completed work for another client for $2,890 on credit. Apr. 28 Tanner withdrew $5,500 cash from the company for personal use. Apr. 29 The company purchased $600 of additional office supplies on credit. Apr. 30 The company paid $435 cash for this month’s utility bill. Descriptions of items that require adjusting entries on April 30, 2015, follow. a) On April 2, the company prepaid $9,000 cash for twelve months' rent for office space. b) The balance in Prepaid insurance represents the premium paid for a 12-month insurance policy; the policy's coverage began on April 1. c) Office supplies on hand as of April 30 total $1,200. d) Straight-line depreciation of office equipment, based on a 5-year life and a $4,000 salvage value, is $500 per month. e) The company has completed work for a client, but has not yet billed the $1,800 fee. f) Wages due to employees, but not yet paid, as of April 30 total $2,600.

Answer 1

Journal Entry
Date	Particulars	Dr. Amt.	Cr. Amt.
1-Apr	Cash	80,000.00
	Office Equipment	26,000.00
	Karla Tanner, Capital		106,000.00
	(Record the issue of Common Stock)
2-Apr	Prepaid Rent	9,000.00
	Cash		9,000.00
	(record the rent paid for 12 months)
3-Apr	Office Equipment	8,000.00
	Supplies	3,600.00
	Accounts Payable		11,600.00
	(Record the equipment & Supplies purch.)
6-Apr	Cash	4,000.00
	Service Revenue		4,000.00
	(record the service revenue)
9-Apr	Accounts Receivable	6,000.00
	Service Revenue		6,000.00
	(record the service revenue)
13-Apr	Accounts Payable	11,600.00
	Cash		11,600.00
	(record the accounts payable paid)
19-Apr	Prepaid Insurance	2,400.00
	Cash		2,400.00
	(Record the insurance paid)
22-Apr	Cash	4,400.00
	Accounts Receivable		4,400.00
	(record the cash received)
25-Apr	Accounts Receivable	2,890.00
	Service Revenue		2,890.00
	(record the service revenue)
28-Apr	Karla Tanner, Withdrawl	5,500.00
	Cash		5,500.00
	(record the dividends paid)
29-Apr	Supplies	600.00
	Accounts Payable		600.00
	(Record the Supplies purch.)
30-Apr	Utilities Expenses	435.00
	Cash		435.00
	(record the utilities paid)
Adjusting Entries
a.	Rent Expense	750.00
	Prepaid Rent		750.00
	(record the rent expense)
b.	Insurance Expense	200.00
	Prepaid Insurance		200.00
	(record the insurance expense)
c.	Supplies Expense	3,000.00
	Supplies		3,000.00
	(record the supplies expense)
d.	Depreciation Expense	500.00
	Accumulated Depreciation - equip.		500.00
	(record the depreciation expense)
e.	Accounts Receivable	1,800.00
	Service Revenue		1,800.00
	(record the service revenue)
f.	Salaries & Wages Expense	2,600.00
	Salaries & Wages Payable		2,600.00
	(record the salaries expense)