Question

Friday Line, a modeling agency, completed the following transactions during the first month of operations:

April 1: Stockholders invested $65,000 cash along with equipment valued at $32,000 in the company in exchange for 1,000 shares of stock.

April 3: Friday Line paid $9,500 cash to settle accounts payable.

April 6: Friday Line completed services for a client and immediately received $2,500 cash.

April 9: Friday Line completed a $7,500 project for a client who must pay within 30 days.

April 12: Friday Line made credit purchases of $9,200 for office equipment and $4,100 for office supplies. Payment is due within 10 days.

April 19: Friday Line paid $3,200 cash for the premium on a 12-month insurance policy.

April 21: Friday Line pre-paid $12,000 for 12 months’ rent for their office space.

April 22: Friday Line received $6,000 cash as a partial payment for the work completed on April 9.

April 25: Friday Line purchased $725 of additional office supplies on credit.

April 26: Friday Line completed work for another client for $3,125 on credit.

April 27: Friday Line paid a dividend of $6,500 cash to its stockholders.

April 30: Friday Line paid $525 cash for this month’s utility bill.

Instructions:

Prepare journals for the above economic transactions and include the effect that each transaction has on the accounting equation. Use the following assignment template for Friday Line Co.

Answer 1

	Date	Account Title	Debit	Credit
	April.1	Cash	$65,000
		Equipment	$32,000
		Common stock		$97,000
	April.3	Accounts Payable	$9,500
		Cash		$9,500
	April.6	Cash	$2,500
		Service Revenue		$2,500
	April.9	Accounts receivable	$7,500
		Service Revenue		$7,500
	April.12	Office Equipment	$9,200
		Office Supplies	$4,100
		AccountsPayable		$13,300
	April.19	Prepaid Inurance	$3,200
		Cash		$3,200
	April.21	Prepaid Rent	$12,000
		Cash		$12,000
	April.22	Cash	$6,000
		Accounts receivable		$6,000
	April.25	Office Supplies	$725
		Accounts Payable		$725
	April.26	Accounts receivable	$3,125
		Service Revenue		$3,125
	April.27	Dividend	$6,500
		Cash		$6,500
	April.30	Utilities expenses	$525
		Cash		$525