Question

Prepare journal entries to record the December transactions and December adjustments considered appropriate. Descriptions are stated below; do not record descriptions

DECEMBER TRANSACTIONS & ADJUSTMENTS

DEC 20x4	1	Pool business began with deposit of $6,000 in a company bank account; 50 shares of stock were issued to the owner of the corporation in exchange for cash.
	2	Pool paid the premium on a one-year insurance policy, $600.
	3	Pool paid December’s rent, $500.
	4	Repair equipment was purchased for $2,200 by a $200 down payment plus signing a non-interest bearing note payable at $100 per month for twenty months, starting January 1. The equipment will operate 40 months before replacement.
	5	Pool purchased chemical supplies from Cordero Company for $195 on an account payable in 30 days.
	15	Pool received $600 of cash deposits from clients as advance payment for pool service to be provided in December.
	20	Pool paid $100 of the amount owed to Cordero Company for chemicals.
	29	Pool’s owner took $300 from the company for personal expenses. The owner claimed this was NOT to be a wage or salary.
	31	Pool received a utility bill for the month of December, $90. This will be paid in January of the next year.
	31	Pool deposited $700 of service revenue earned in December. In addition, $400 of the client deposits were earned as of December 31.
	31 31	The inventory of unused pool chemicals was $90 at the end of December. Pool Corporation estimates income taxes are $160 for December. Tax payments will be made quarterly, starting next February.

Answer 1

Dec 1st:
Cash(db)6000
common stock (cr) 6000
Dec 2:
Prepaid insurance(db)600
Cash(cr)600
Dec 3:
Rent expense(db) 500
cash(cr) 500
Dec 4:
Equipment(db)2200
cash(cr)200
Notes payable(cr)2000
Dec 5:
supplies(db)195
Cash(cr)195
Dec 15:
Cash(dB)600
unearned revenue(cr) 600
Dec 20:
account payable(db)100
cash(Cr)100
Dec 29:
capital withdrawn(db) 300
cash(Cr)300
Dec 31:
utility expense(db)90
utility payable(cr)90
cash(db)700
service reveneue(cr)700
unearnd revenue(db)400
service revenue(cr)400
supplies expense(db) 105
supplies(cr)105
Income tax expense(db)160
Incometax payable(cr)160

Adjustments:
Insurance expense(db) 600/12=50
Prepaid insurance(cR)50
Notes payable(db)100
cash(cr)100