Question

Following are the transactions of a new company called Pose-for-Pics. Aug. 1 Madison Harris, the owner, invested $12,000 cash and $51,600 of photography equipment in the company in exchange for common stock. 2 The company paid $2,300 cash for an insurance policy covering the next 24 months. 5 The company purchased office supplies for $2,280 cash. 20 The company received $3,250 cash in photography fees earned. 31 The company paid $870 cash for August utilities. Prepare general journal entries for the above transactions.

Answer 1

Aug. 1

Cash $12,000 (debit)

Equipment $51,600 (debit)

Common Stock $63,600 (credit)

Aug. 2

Prepaid Insurance $2,300 (debit)

Cash $2,300 (credit)

Aug. 5

Office Supplies $2,280 (debit)

Cash $2,280 (credit)

Aug. 20

Cash $3,250 (debit)

Fees Earned $3,250 (credit)

Aug. 31

Utilities Expenses $870 (debit)

Cash $870 (credit)

Step-by-step explanation:

Aug. 1

Recognize the Cash, Equipment as well as the Equity element : Common Stock

Aug. 2

Recognize the Asset : Prepaid Insurance and de-recognize the Cash Assets

Aug. 5

Recognize the Asset : Office Supplies and de-recognize the Cash Assets

Aug. 20

Cash $3,250 (debit)

Fees Earned $3,250 (credit)

Recognize the Asset : Cash and also recognize the Revenue : Fees Earned.

Aug. 31

Recognize the Expense : Utilities Expenses and de-recognize the Cash Assets