Question

The following transactions occur for Cardinal Music Academy during the month of October: Provide music lessons to students for $7,500 cash. Purchase prepaid insurance to protect musical equipment over the next year for $3,060 cash. Purchase musical equipment for $10,500 cash. Obtain a loan from a bank by signing a note for $11,000.

Record the transactions. The company uses the following accounts:
Cash, Prepaid Insurance, Equipment, Notes Payable, and Service Revenue.

Answer 1

Answer and Explanation:

The journal entries are shown below:

cash Dr $7,500

To Service revenue $7,500

(being cash receipts is recorded)

Prepaid insurance $3,060

To cash $3,060

(being cash paid is recorded)

Musical equipment Dr $10,500

To cash $10,500

(being cash paid is recorded)

Cash Dr $11,000

To note payable $11,000

(being receipt of the loan is recorded)

These four journal entries are need to be recorded