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. Wint: Debit Prepaid Insurance for $6,000. 22 The company received $7,640 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.

Answer 1

Journal Entry Account Title Date Debit ($) Credit ($) 110000 26400 Apr-01 Cash Office Equipments To Common Stock (Being Cash and office equipmets invested in business) 136400 7200 Apr-02 Prepaid Rent To Cash (Being Rent paid in advance) 7200 13200 2640 Apr-03 Office Equipment Office supplies To Account Payable (Being office equipment & office supplies purchased) 15840

2000 Apr-06 Cash To Service Revenue (Being cash recived for service provided) 2000 8800 Apr-09 Account Receivable To Service Revenue (Being service provided on credit) 8800 15840 Apr-13 Account Payable To Cash (Being cash paid for purchase) 15840 6000 Apr-19 Prepaid Insurance To Cash (Being Insurance paid) 6000 7040 Apr-22 Cash To Account Receivable (Being cash received for service provided) 7040

2640 Apr-25 Account Receivable To Service Revenue (Being service provided on credit) 2640 6200 Apr-28 Dividend To Cash (Being dividend paid) 6200 880 Apr-29 Office supplies To Account Payable (Being office supplies purchased on credit) 880 700 Apr-30 Utilities Expense To Cash (Utilities Expense paid) 700

Dr Date Particulars Apr-01 To Balance b/d Apr-01 To Common Stock Apr-06 To Service Revenue Apr-22 To Account Receivable Ledger Accounts Cash A/C Amount ($) Date 0 Apr-02 110000 Apr-13 2000 Apr-19 7040 Apr-28 Apr-30 Apr-30 119040 Particulars By Prepaid Rent By Account Payable Prepaid Insurance By Dividend By Utility Expense By Balance c/d Cr Amount ($) 7200 15840 6000 6200 700 83100 119040 Dr Cr Particulars Amount ($) Date Apr-01 Apr-01 Apr-03 Particulars To Balance b/d To Common Stock To Account Payable Office Equipments Amount ($) Date 0 26400 13200 Apr-30 39600 By Balance c/d 39600 39600

Dr I no Particulars Common Stock Amount ($) Tr no Particulars Apr-01 By Balance b/d Apr-01 By Cash 136400 Apr-01 By Office equipments 136400 Cr Amount ($) 0 110000 26400 136400 Apr-30 To Balance c/d Cr Particulars Amount ($) Dr Tr no Apr-01 Apr-02 Particulars To Balance b/d To Cash Prepaid Rent Amount ($) Tr no 0 7200 Apr-30 7200 By Balance c/d 7200 7200

Dr Cr Ino Particulars Amount ($) Apr-01 Apr-03 Apr-29 Particulars To Balance b/d To Account Payable To Account Payable Office supplies Amount ($) Tr no 0 2640 Apr-30 3520 880 By Balance c/d 3520 3520 Dr Tr no Apr-13 Cr Amount ($) Particulars To Cash Account Payable Amount ($) Tr no Particulars 15840 Apr-01 By Balance b/d Apr-03 By Office equipments Apr-03 By Office supplies Apr-29 By office supplies 880 16720 13200 2640 880 Apr-30 By Balance c/d 16720

Dr Tr no Particulars Service Revenue Amount ($) Tr no Particulars Apr-01 By Balance b/d Apr-06 By Cash Apr-09 By Account Receiable 13440 Apr-25 By Account Receiable 13440 Cr Amount ($) 0 2000 8800 2640 13440 Apr-30 By Balance c/d Dr Cr Amount ($) Tr no Particulars Particulars By Balance b/d To Cash Prepaid Insurance Amount ($) Tr no 0 6000 6000 f By Balance c/d 6000 6000

Dr Tr no Particulars By Cash Cr Amount ($) 7040 Apr-01 Apr-09 Apr-25 Particulars To Balance b/d To Service Revenue To Service Revenue Account Recievable Amount ($) Tr no 0 Apr-22 8800 2640 Apr-30 11440 By Balance c/d 4400 11440 Dr Cr Amount ($) Tr no Particulars Apr-01 Apr-28 Particulars To Balance b/d To Cash Dividend Amount ($) Tr no 0 6200 Apr-30 6200 By Balance c/d 6200 6200

Dr Cr I no Particulars Amount ($) Particulars By Balance b/d To Cash Utilities Expense Amount ($) Tr no 0 700 Apr-30 700 Apr-30 By Balance c/d 700 700

Trial Balance as of April 30 Account Title Debit($) Credit($) Cash 83100 Office equipments 39600 Common Stock 136400 Prepaid rent 7200 Office Supplies 3520 Account Payable 880 Service Revenue 13440 Prepaid Insurance 6000 Account Receivable 4400 Dividend 6200 Utilities expenses 700 Total balance 150720 150720