Question

D. Vader opens a Web consulting business called Starworks and completes the following transactions in its first month of operations.

April		1		Vader invested $95,000 cash along with office equipment valued at $22,800 in the company in exchange for common stock.
		1		The company agreed to do a special six-month web design course (starting immediately) for a client. The contract calls for a monthly fee of $2,500, and the client paid the first five months' fees in advance.
		3		The company made credit purchases for $11,400 in office equipment and $2,280 in office supplies. Payment is due within 10 days.
		29		The company purchased $760 of additional office supplies with a 3 months note.

  Required:
Prepare journal entries to record the transactions for April and post them to the ledger accounts

  

Answer 1

Date	Particulars	Debit ( $ )	Credit ($)
April 1	Cash A/c	95000
	Office Equipment A/c	22800
	Comman Stock		117800
	(To record Cash and equipment invested in exchange of comman Stock)
April 1	Cash A/c	12500
	Advance service revenue A/c		12500
	(To record Advance money received for 5 months against the Future contract of 6 months )
April 3	Office equipment A/c	11400
	Office supplies	2280
	Creditors A/c		13680
	(To record purchase of office equipment and supplies on credit period of 10 days )
April 13	Creditor A/c	13680
	Cash A/c		13680
	(To record payment made to creditor towards Office equipment and office supplies)
April 29	Office supplies A/c	760

	Notes payable A/c		760
	(To record purchase of office supplies through notes payable )

As the purchase of office equipment and supplies was taken on 10 days credit it is assumed that it is paid after 10 days

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