Question

Karla Tanner opens a Web consulting business called Linkworks and completes the following transactions in its first month of operations.

April 1 Tanner invested $120,000 cash along with office equipment valued at $28,800 in the company.

2 The company prepaid $7,200 cash for twelve months' rent for office space. (Hint: Debit Prepaid Rent for) ($7,200 .)

3 The company made credit purchases for $14,400 in office equipment and $2,880 in office supplies. Payment 1 ~s \} due within 10 days.

6 The company completed services for a client and immediately received $2,000 cash.

9 The company completed a $9,600 project for a client, who must pay within 30 days.

13 The company paid $17,280 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. (Hint: Debit Prepaid Insurance (for $6,000.1

22 The company received $7,680 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 Tanner withdrew $6,200 cash from the company for personal use.

29. The company purchased $960 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); K. Tanner, Capital (301); K. Tanner, Withdrawals (302); 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

Credit Date Journal General Debit 1-Apr Cash Office equipment 120,000 28,800 K Tanner's Capital (To record investment by cash and office equipment) 148,800 2-Apr Prepaid Rent 7,200 Cash 7,200 (To record payment of advance rent for 12 months) 3-Apr 0ffice equipment Office Supplies Accounts payable (To record purchase of office equipment and supplies on credit) 14,400 2,880 17,280 6-Apr Cash 2,000 Service revenue 2,000 (To record cash received from Services provided) 9,600 13-Apr Accounts Receivable Service revenue 9,600 16 (to record service provided on credit) 19-Apr Prepaid Insurance 6,000 Cash 6,000 (To record payment of insurance policy) 22-Apr Cash 7,680 Accounts Receivable 7,680 (To record partial payment received for services provided)

25-Apr Accounts Receivable 2,640 2,640 Service revenue (to record service provided on credit) 28-Apr K Tanner Withdrawls 6,200 Cash 6,200 (To record withdrwal of cash for personal use) 29-Apr office Supplies 960 Accounts payable (To record purchase of office supplies) 960 30-Apr Utility expenses 700 Cash 700 (To record payment of utility expenses)

106: Accounts Receivable 101:Cash Date Debit Credit Balance Date Debit Credit Balance 1-Apr 120,000 2-Apr 6-Аpr 19-Apr 22-Apr 28-Apr 30-Apr 13-Apr 22-Apr 25-Apr 30-Apr 9,600 120,000 9,600 7,200 112,800 7,680 1,920 2,640 4,560 4,560 2,000 114,800 6,000 108,800 7,680 116,480 110,280 109,580 6,200 700 124:Office Supplies 128: Prepaid Insurance Date Debit Credit Balance Date Debit Credit Balance 3-Аpг 29-Apr 30-Apr 19-Apr 30-Apr 2,880 2,880 6,000 6,000 960 3,840 6,000 3,840 163: Office Equipment 131: Prepaid Rent Credit Date Debit Balance Date Debit Credit Balance 3-Аpr 30-Apr 1-Apr 3-Аpг 30-Apr 28,800 7,200 7,200 28,800 43,200 43,200 7,200 14,400 301: K Tanner Capital 201:Accounts Payable Debit Date Debit Credit Balance Date Credit Balance 3-Аpr 29-Apr 30-Apr 1-Apг 30-Apr 17,280 960 17,280 148,800 148,800 148,800 18,240 18,240

302: K Tanner Withdrawl 403: Service Revenue Date Debit Credit Balance Date Debit Credit Balance 28-Apr 6,200 6-Apr 13-Apr 25-Apr 6,200 2,000 2,000 9,600 11,600 2,640 14,240 690:Utility Expenses Credit Date Debit Balance 30-Apr 700 700

LINKWORKS Trail Balance 30-Apr Accounts Debit 109,580 4,560 Credit Cash |Accounts Receivable Office Supplies Prepaid Insurance Prepaid rent Office Equipment Accounts Payable 3,840 6,000 7,200 43,200 18,240 Tanner Capital 148,800 K Tanner Withdrawl Service revenue |Utility Expenses 6,200 14,240 700 181,280181,280