Question

Karla Tanner opened a Web consulting business called Linkworks and completed the following transactions in its first month of operations.
  

April		1		Tanner invested $110,000 cash along with office equipment valued at $26,400 in the company in exchange for common stock.
		2		The company prepaid $7,200 cash for 12 months’ rent for office space. Hint: Debit Prepaid Rent for $7,200.
		3		The company made credit purchases for $13,200 in office equipment and $2,640 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 $8,800 project for a client, who must pay within 30 days.
		13		The company paid $15,840 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 $7,040 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		The company paid a $6,200 cash dividend.
		29		The company purchased $880 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); Common Stock (307); Dividends (319); Services Revenue (403); and Utilities Expense (690).
2. Post the journal entries from part 1 to the ledger accounts.
3. Prepare a trial balance as of April 30.

Next Visit question map

Question 1 of 8 Total1

Answer 1

Journal Entries
Date	Particulars			Debit	Credit
01-Apr	Cash			$ 1,10,000.00
	To Common Stock				$ 1,10,000.00
02-Apr	Prepaid Rent			$      7,200.00
	To Cash				$      7,200.00
03-Apr	Office Equipment			$    13,200.00
	Office Supplies			$      2,640.00
	To Accounts Payable				$    15,840.00
06-Apr	Cash			$      2,000.00
	To Service Revenue				$      2,000.00
09-Apr	Accounts Receivable			$      8,800.00
	To Service Revenue				$      8,800.00
13-Apr	Accounts Payable			$    15,840.00
	To Cash				$    15,840.00
19-Apr	Prepaid Insurance			$      6,000.00
	To Cash				$      6,000.00
22-Apr	Cash			$      7,040.00
	To Accounts Receivable				$      7,040.00
25-Apr	Accounts Receivable			$      2,640.00
	To Service Revenue				$      2,640.00
28-Apr	Dividend			$      6,200.00
	To Cash				$      6,200.00
29-Apr	Office Supplies			$         880.00
	To Cash				$         880.00
30-Apr	Utilities Expense			$         700.00
	To Cash				$         700.00

Ledgers:

Cash					Common Stock					Prepaid Rent					Office Equipment
01-Apr	$ 1,10,000.00	02-Apr	$   7,200.00		End. Bal.	$ 1,10,000.00	01-Apr	$ 1,10,000.00		02-Apr	$   7,200.00	End. Bal.	$   7,200.00		03-Apr	$ 13,200.00	End. Bal.	$ 13,200.00
06-Apr	$      2,000.00	13-Apr	$ 15,840.00
22-Apr	$      7,040.00	19-Apr	$   6,000.00
		28-Apr	$   6,200.00
		29-Apr	$      880.00
		30-Apr	$      700.00
		End. Bal.	$ 82,220.00		Office Supplies					Accounts Payable					Service Revenue
					03-Apr	$      2,640.00				13-Apr	$ 15,840.00	03-Apr	$ 15,840.00				06-Apr	$   2,000.00
					29-Apr	$         880.00	End. Bal.	$      3,520.00									09-Apr	$   8,800.00
															End. Bal.	$ 13,440.00	25-Apr	$   2,640.00
					Accounts Receivable					Prepaid Insurance					Dividend
					09-Apr	$      8,800.00	22-Apr	$      7,040.00		19-Apr	$   6,000.00	End. Bal.	$   6,000.00		28-Apr	$   6,200.00	End. Bal.	$   6,200.00
					25-Apr	$      2,640.00	End. Bal.	$      4,400.00
					Utilities Expense
					30-Apr	$         700.00	End. Bal.	$         700.00