Question

Following are the transactions of a new company called Pose-for-Pics.

Aug.
1 Madison Harris, the owner, invested $12,500 cash and $53,750 of photography equipment in the company.
2 The company paid $2,500 cash for an insurance policy covering the next 24 months.
5 The company purchased office supplies for $2,375 cash.
20 The company received $3,750 cash in photography fees earned.
31 The company paid $880 cash for August utilities.

Required:
Prepare general journal entries for the above transactions.

Answer 1

General journal

Pose-for-Pics

Aug 1

Debit : Cash $12,500

Debit : Equipment $53,750

Credit : Capital $66,250

Aug 2

Debit : Prepaid Insurance $2,500

Credit : Cash $2,500

Aug 5

Debit : Office Supplies $2,375

Credit : Cash $2,375

Aug 20

Debit : Cash $3,750

Credit : Service Revenue $3,750

Aug 31

Debit : Utilities Expense $880

Credit : Cash $880

Step-by-step explanation:

The starting point is to identify accounts affected in the transaction, then proceed to prepare the journal entry as shown above.