Question

Hannah's Hair Studio is an incorporated business run by Hannah Barbera. During its first month of operations, the following transactions occurred:

1. Hannah starts the business by investing equipment worth $5,000 plus $11,000 cash in exchange for company shares.

2. Hannah's Hair Studio purchases $400 in supplies on account.

3. Hannah's Hair Studio collects $1,300 in cash from customers: $900 for haircare services rendered and $400 for coupons that can be redeemed on future visits for haircare.

4. Hannah's Hair Studio paid the supplies purchased in #2 .

5. Hannah's Hair Studio paid $150 cash for cleaning services for the month.

6. Hannah's Hair Studio paid $300 cash for supplies.

7. Hannah's Hair Studio provided $500 in haircare services to the local police department, billed on account.

8. Customers of Hannah's Hair Studio used $150 worth of coupons (from #3) in exchange for haircare services, .

9. Hannah's Hair Studio paid $220 cash for gas and electricity bills.

10. Hannah's Hair Studio collected the $500 owing from the police department (from #7).

journal entries

Answer 1

JOURNAL ENTRIES

JOURNAL ENTRIES

		$	$
1	Equipment Dr.	5,000
	Cash a/c. Dr.	11,000
	Share capital Cr.		16,000
	(commenced business with cash and equipment)
2	Purchase of supplies A/c. Dr.	400
	Account payable Cr.		400
	(supplies purchased on credit)
3	Cash a/c. Dr.	1,300
	Service revenue Cr.		900
	Unearned income for future services Cr.		400
	(cash received for current service and future service coupons)
4	Account payable Dr.	400
	Cash Cr.		400
	(payment made to creditor)
5	Cleaning service Dr.	150
	Cash Cr.		150
	(paid for cleaning service)
6.	Purchase of supplies Dr.	300
	Cash Cr.		300
	(paid for supplies purchased)
7	Account receivable Dr.	500
	Service revenue Cr.		500
	(service rendered to police department billed on account)
8	Unearned income for future services Dr.	150
	Service revenue Cr.		150
	( coupons used by customers in exchange for haircare services)
9	Gas and electricity expense Dr.	220
	Cash Cr.		220
	(gas and electricity bill paid)
10	Cash Dr. Account payable Cr.	500	500
	(amount collected from police department)