Question

Karla Tanner opens a Web consulting business called Linkworks and completes the following transactions in its first month of operations. April 1 Tanner invests $105,000 cash along with office equipment valued at $25,200 in the company. 2 The company prepaid $7,200 cash for twelve months' rent for office space. (Hint: Debit Prepaid Rent for $7,200.) 3 The company made credit purchases for $12,600 in office equipment and $2,520 in office supplies. Payment is due within 10 days. 6 The company completed services for a client and immediately received $2,000 cash. 9 The company completed a $8,400 project for a client, who must pay within 30 days. 13 The company paid $15,120 cash to settle the account payable created on April 3. 19 The company paid $6,000 cash for the premium on a 12-month insurance policy. (Hint: Debit Prepaid Insurance for $6,000.) 22 The company received $6,720 cash as partial payment for the work completed on April 9. 25 The company completed work for another client for $2,640 on credit. 28 Tanner withdrew $6,200 cash from the company for personal use. 29 The company purchased $840 of additional office supplies on credit. 30 The company paid $700 cash for this month's utility bill. Required: 1. Prepare general journal entries to record these transactions using the following titles: Cash (101); Accounts Receivable (106); Office Supplies (124); Prepaid Insurance (128); Prepaid Rent (131); Office Equipment (163); Accounts Payable (201); K. Tanner, Capital (301); K. Tanner, Withdrawals (302); Services Revenue (403); and Utilities Expense (690).

2.	Open the following ledger accounts for the account titles referred in part 1 and post the journal entries from part 1 to the ledger accounts. (Do not skip lines, Enter transactions in chronological order.)
3. Prepare a trial balance as of April 30.

Answer 1

1) journal entries:
Date	Accounts Titles	Ref.	Debit $	Credit $
1-Apr	Cash	101	105000
	Office Equipment	163	25200
	K. Tanner, capital	301		130200
2-Apr	Prepaid Rent	131	7200
	Cash	101		7200
3-Apr	Office Equipment	163	12600
	Office Supplies	124	2520
	AP	201		15120
6-Apr	Cash	101	2000
	Service Revenue	403		2000
9-Apr	AR	106	8400
	Service Revenue	403		8400
13-Apr	AP	201	15120
	Cash	101		15120
19-Apr	Prepaid Insurance	128	6000
	Cash	101		6000
22-Apr	Cash	101	6720
	AR	106		6720
25-Apr	AR	106	2640
	Service Revenue	403		2640
28-Apr	K. Tanner, Withdrawals	302	6200
	Cash	101		6200
29-Apr	Office Supplies	124	840
	AP	201		840
30-Apr	utility exp	690	700
	Cash	101		700

2) T-Accounts:
DEBIT	AMOUNT $	CREDIT	AMOUNT$
Cash a/c
1	105000	2	7200
6	2000	13	15120
22	6720	19	6000
		28	6200
		30	700
		cb	78500
	113720	total	113720
Office Equip a/c
1	25200
3	12600
total	37800
K. Tanner, capital a/c
		1	130200
Prepaid Rent a/c
2	7200
Office Supplies a/c
3	2520
29	840	cb	3360
AP a/c
13	15120	3	15120
cb	840	29	840
Service reve a/c
		6	2000
		9	8400
cb	13040	25	2640
AR a/c
9	8400	22	6720
25	2640	cb	4320
Prepaid Insu a/c
19	6000
K. Tanner, Withdrawalsj a/c
28	6200
Utility Exp a/c
30	700

3)Trial Balance:
Account titles	Debit $	Credit$
Cash	78500
off equip	37800
K. Tanner, capital a/c		130200
Prepaid rent	7200
Off supplies	3360
AP		840
Service revenue		13040
AR	4320
Prepaid Insu	6000
K. Tanner, Withdrawals a/c	6200
Utility exp	700
TOTAL	144080	144080