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 April 1 Tanner invested $115,000 cash along with office equipment valued at $27,600 n the company in exchange for common stock. 2 The company prepaid $7,200 cash for 12 months' rent for office space. (Hint: Debit Prepaid Rent for $7,200.) 3 The company made credit purchases for $13,800 in office equipment and $2,760 in office supplies. Payment is due within 10 days 6 The company completed services for a client and immediately received $2,000 cash. 9 The company completed a $9,200 project for a client, who must pay within 30 days. 13 The company paid $16,560 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.) 22 The company received $7,360 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 The company paid $6,200 cash in dividends 29 The company purchased $920 of additional office supplies on credit. 30 The company paid $700 cash for this month's utility bill

Explanation / Answer

Date

Solution: LINKWORKS Trial Balance April 30 Debit Credit Cash 87,700 Accounts receivable 4,480 Office supplies 3,680 Prepaid insurance 6,000 Prepaid rent 7,200 Office equipment 41,400 Accounts payable 920 Common stock 142,600 Dividends 6,200 Services revenue 13,840 Utilities expense 700 Total 157360 157360 Working Notes:

Date

General Journal Debit Credit April 01 Cash 115,000 Office equipment 27,600 Common stock 142,600 April 02 Prepaid rent 7,200 Cash 7,200 April 03 Office equipment 13,800 Office supplies 2,760 Accounts payable 16,560 April 06 Cash 2,000 Services revenue 2,000 April 09 Accounts receivable 9,200 Services revenue 9,200 April 13 Accounts payable 16,560 Cash 16,560 April 19 Prepaid insurance 6,000 Cash 6,000 April 22 Cash 7,360 Accounts receivable 7,360 April 25 Accounts receivable 2,640 Services revenue 2,640 April 28 Dividends 6,200 Cash 6,200 April 29 Office supplies 920 Accounts payable 920 April 30 Utilities expense 700 Cash 700 Now posting on ledger Cash Date Debit Credit Balance April 01 115,000 115,000 April 02 7,200 107,800 April 06 2,000 109,800 April 13 16,560 93,240 April 19 6000 87,240 April 22 7,360 94,600 April 28 6,200 88,400 April 30 700 87,700 Notes: Debit is added to balance and credit is deducted from balance Accounts Receivable Date Debit Credit Balance April 09 9,200 9,200 April 22 7,360 1,840 April 25 2,640 4,480 Notes: Debit is added to balance and credit is deducted from balance Office Supplies Date Debit Credit Balance April 03 2,760 2,760 April 29 920 3,680 Notes: Debit is added to balance and credit is deducted from balance Prepaid Insurance Date Debit Credit Balance April 19 6,000 6,000 Notes: Debit is added to balance and credit is deducted from balance Prepaid Rent Date Debit Credit Balance April 02 7,200 7,200 Notes: Debit is added to balance and credit is deducted from balance Office Equipment Date Debit Credit Balance April 01 27,600 27,600 April 03 13,800 41,400 Notes: Debit is added to balance and credit is deducted from balance Accounts Payable Date Debit Credit Balance April 03 16,560 16,560 April 13 16,560 0 April 29 920 920 Accounts Payable is credit balance account Notes: Debit is deducted from balance and credit is added to balance Common Stock Date Debit Credit Balance April 01 142,600 142,600 Common stock is credit balance account Notes: Debit is deducted from balance and credit is added to balance Dividends Date Debit Credit Balance April 28 6,200 6,200 Notes: Debit is added to balance and credit is deducted from balance Services Revenue Date Debit Credit Balance April 06 2,000 2,000 April 09 9,200 11,200 April 25 2,640 13,840 Services Revenue is credit balance account Notes: Debit is deducted from balance and credit is added to balance Utilities Expense Date Debit Credit Balance April 30 700 700 Notes: Debit is added to balance and credit is deducted from balance Notes: Balances of above ledger is posted in trial balance LINKWORKS Trial Balance April 30 Debit Credit Cash 87,700 Accounts receivable 4,480 Office supplies 3,680 Prepaid insurance 6,000 Prepaid rent 7,200 Office equipment 41,400 Accounts payable 920 Common stock 142,600 Dividends 6,200 Services revenue 13,840 Utilities expense 700 Total 157360 157360 Please feel free to ask if anything about above solution in comment section of the question.

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