Question
In: Accounting
D. Vader opens a Web consulting business called Starworks and completes the following transactions in its...
D. Vader opens a Web consulting business called Starworks and completes the following transactions in its first month of operations.
April 1 Vader invested $95,000 cash along with office equipment valued at $22,800 in the company in exchange for common stock.
April 1 The company prepaid $7,200 cash for 6 months’ rent for office space.
April 1 The company paid $6,000 cash for the premium on a 12-month insurance policy
April 1 The company agreed to do a special six-month web design course (starting immediately) for a client. The contract calls for a monthly fee of $2,500, and the client paid the first five months' fees in advance.
April 3 The company made credit purchases for $11,400 in office equipment and $2,280 in office supplies. Payment is due within 10 days.
April 6 The company completed services for a client and immediately received $2,000 cash.
April 9 The company completed a $7,600 project for a client, who must pay within 30 days.
April 13 The company paid cash to settle the account payable created on April 3.
April 22 The company received $6,080 cash as partial payment for the work completed on April 9.
April 25 The company completed work for another client for $2,640 on credit.
April 28 The company paid $6,200 cash in dividends.
April 29 The company purchased $760 of additional office supplies with a 3 months note.
30 The company paid $700 cash for this month’s utility bill.
Use the following information
a. At the end of the month, $1,600 of office supplies are still available.
b. This month’s depreciation on the computer equipment is $500.
c. Employees earned $1,300 of unpaid and unrecorded salaries as of month-end.
d. The company earned $1,750 of commissions that are not yet billed at month-end.
Required:
1. Prepare journal entries to record the transactions for April and post them to the ledger accounts
2. Prepare an unadjusted trial balance as of April 30.
3. Journalize all the adjusting entries necessary for the month and prepare the adjusted trial balance.
Solutions
Expert Solution
1. Prepare journal entries to record the transactions for April and post them to the ledger accounts
________________________________________________________
Ledger posting as follows:
| Cash | |||
| Date | Debit | Credit | Balance |
| April.01 | $95,000 | $95,000 | |
| April.01 | $7,200 | $87,800 | |
| April.01 | $6,000 | $81,800 | |
| April.01 | $12,500 | $94,300 | |
| April.06 | $2,000 | $96,300 | |
| April.13 | $13,680 | $82,620 | |
| April.22 | $6,080 | $88,700 | |
| April.28 | $6,200 | $82,500 | |
| April.30 | $700 | $81,800 | |
| Office Equipment | |||
| Date | Debit | Credit | Balance |
| April.01 | $22,800 | $22,800 | |
| April.03 | $11,400 | $34,200 | |
| Common Stock | |||
| Date | Debit | Credit | Balance |
| April.01 | $117,800 | $117,800 | |
| Accounts Receivable | |||
| Date | Debit | Credit | Balance |
| April.09 | $7,600 | $7,600 | |
| April.22 | $6,080 | $1,520 | |
| April.26 | $2,640 | $4,160 | |
| Accounts payable | |||
| Date | Debit | Credit | Balance |
| April.03 | $13,680 | $13,680 | |
| April.13 | $13,680 | $0 | |
| Note payable | |||
| Date | Debit | Credit | Balance |
| April. 29 | $760 | $760 | |
| Dividends | |||
| Date | Debit | Credit | Balance |
| April. 28 | $6,200 | $6,200 | |
| Utilties Expense | |||
| Date | Debit | Credit | Balance |
| April. 30 | $700 | $700 | |
| Fees Earned | |||
| Date | Debit | Credit | Balance |
| April.06 | $2,000 | $2,000 | |
| April.09 | $7,600 | $9,600 | |
| April.25 | $2,640 | $12,240 | |
| Office Supplies | |||
| Date | Debit | Credit | Balance |
| April.03 | $2,280 | $2,280 | |
| April.29 | $760 | $3,040 | |
| Prepaid Rent | |||
| Date | Debit | Credit | Balance |
| April.01 | $7,200 | $7,200 | |
| Prepaid Insurance | |||
| Date | Debit | Credit | Balance |
| April.01 | $6,000 | $6,000 | |
| Unearned Fees | |||
| Date | Debit | Credit | Balance |
| April.01 | $12,500 | $12,500 | |
__________________________________________________________________
2. Prepare an unadjusted trial balance as of April 30.
_____________________________________________________________________________
3. Journalize all the adjusting entries necessary for the month and prepare the adjusted trial balance.
__________________________________________________________________
| Adjusted Trial balance | ||
| Debit | Credit | |
| Cash | $81,800 | |
| Accounts Receivable [$4160+$1750] | $5,910 | |
| Office supplies | $1,600 | |
| Prepaid Rent | $7,200 | |
| Prepaid Insurance | $6,000 | |
| Equipment | $34,200 | |
| Accounts payable | $0 | |
| Note payable | $760 | |
| Unearned fees | $12,500 | |
| Common stock | $117,800 | |
| Dividend | $6,200 | |
| Earned fees | $12,240 | |
| Utilties expense | $700 | |
| Office supplies expense | $1,440 | |
| Depreciation expense | $500 | |
| Accumulated depreciation | $500 | |
| Salaries expense | $1,300 | |
| Salaries payable | $1,300 | |
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