Karla Tanner opens a Web consulting business called Linkworks and completes the

Question

Karla Tanner opens a Web consulting business called Linkworks and completes the following transactions in its first month of operations. Tanner invests $90,000 cash along with office equipment valued at $21.600 in the company in exchange for common stock. The company prepaid $7,200 cash for twelve months' rent for office space. The company made credit purchases for $10,800 in office equipment and $2,160 in office supplies. Payment is due within 10 days. 6 The company completed services for a client and immediately received $2,000 cash. The company completed a $7,200 project for a client, who must pay within 30 days. The company paid $12,960 cash to settle the account payable created on April 3. The company paid $6,000 cash for the premium on a 12-month insurance policy. The company received $5,760 cash as partial payment for the work completed on April 9. The company completed work for another client for $2,640 on credit. The company paid $6,200 cash in dividends. The company purchased $720 of additional office supplies on credit. 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).

Explanation / Answer

Date General Journal Debit ($) Credit ($) Apr-01 Cash 90000 Office Equipment 21600 common stock 111600 (started business by ivesting cash $90000 and office equipment $21600 in exchenge of common stock) 2 Prepaid Rent 7200 Cash 7200 (rent for 3 months paid in advance) 3 office equipment 10800 office supplies 2160 accounts payable 12960 (purchased office equipment and office supplies on account) 6 Cash 2000 Service Revenue 2000 (service revenue recived on completion of service) 9 Accounts receivable 7200 Service revenue 7200 (service provided to a client on account) 13 cash 12960 Accounts payable 12960 (paid to settle the accounts payable) 19 Prepaid Insurance 6000 cash 6000 (paid insurance premium for 12 months in advance) 22 Cash 5760 Accounts receivable 5760 (received partial payment on account of accounts receivable) 25 Accounts receivable 2640 Service revenue 2640 (service provided to a client on account) 28 Dividend 6200 cash 6200 (dividend paid in cash) 29 office supplies 720 accounts payable 720 (purchased office supplies on account) 30 Utilities Expenses 700 Cash 700 (paid utilities expenses)

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