Karla Tanner opens a web consulting business called Linkworks and recorded the f
ID: 2498980 • Letter: K
Question
Karla Tanner opens a web consulting business called Linkworks and recorded the following transactions in its first month of operations. Apr. 1 Tanner invests $80,000 cash along with office equipment valued at $26,000 in the company in exchange for common stock. Apr. 2 The company prepaid $9,000 cash for twelve months’ rent for office space. The company's policy is record prepaid expenses in balance sheet accounts. Apr. 3 The company made credit purchases for $8,000 in office equipment and $3,600 in office supplies. Payment is due within 10 days. Apr. 6 The company completed services for a client and immediately received $4,000 cash. Apr. 9 The company completed a $6,000 project for a client, who must pay within 30 days. Apr. 13 The company paid $11,600 cash to settle the account payable created on April 3. Apr. 19 The company paid $2,400 cash for the premium on a 12-month insurance policy. The company's policy is record prepaid expenses in balance sheet accounts. Apr. 22 The company received $4,400 cash as partial payment for the work completed on April 9. Apr. 25 The company completed work for another client for $2,890 on credit. Apr. 28 The company paid $5,500 cash in dividends. Apr. 29 The company purchased $600 of additional office supplies on credit. Apr. 30 The company paid $435 cash for this month’s utility bill. Descriptions of items that require adjusting entries on April 30, 2015, follow. a) On April 2, the company prepaid $9,000 cash for twelve months' rent for office space. b) The balance in Prepaid insurance represents the premium paid for a 12-month insurance policy; the policy's coverage began on April 1. c) Office supplies on hand as of April 30 total $1,200. d) Straight-line depreciation of office equipment, based on a 5-year life and a $4,000 salvage value, is $500 per month. e) The company has completed work for a client, but has not yet billed the $1,800 fee. f) Wages due to employees, but not yet paid, as of April 30 total $2,600. Karla Tanner opens a web consulting business called Linkworks and recorded the following transactions in its first month of operations. Apr. 1 Tanner invests $80,000 cash along with office equipment valued at $26,000 in the company in exchange for common stock. Apr. 2 The company prepaid $9,000 cash for twelve months’ rent for office space. The company's policy is record prepaid expenses in balance sheet accounts. Apr. 3 The company made credit purchases for $8,000 in office equipment and $3,600 in office supplies. Payment is due within 10 days. Apr. 6 The company completed services for a client and immediately received $4,000 cash. Apr. 9 The company completed a $6,000 project for a client, who must pay within 30 days. Apr. 13 The company paid $11,600 cash to settle the account payable created on April 3. Apr. 19 The company paid $2,400 cash for the premium on a 12-month insurance policy. The company's policy is record prepaid expenses in balance sheet accounts. Apr. 22 The company received $4,400 cash as partial payment for the work completed on April 9. Apr. 25 The company completed work for another client for $2,890 on credit. Apr. 28 The company paid $5,500 cash in dividends. Apr. 29 The company purchased $600 of additional office supplies on credit. Apr. 30 The company paid $435 cash for this month’s utility bill. Descriptions of items that require adjusting entries on April 30, 2015, follow. a) On April 2, the company prepaid $9,000 cash for twelve months' rent for office space. b) The balance in Prepaid insurance represents the premium paid for a 12-month insurance policy; the policy's coverage began on April 1. c) Office supplies on hand as of April 30 total $1,200. d) Straight-line depreciation of office equipment, based on a 5-year life and a $4,000 salvage value, is $500 per month. e) The company has completed work for a client, but has not yet billed the $1,800 fee. f) Wages due to employees, but not yet paid, as of April 30 total $2,600.Explanation / Answer
Date Account title and explanation Debit($) Credit($) Apr-01 Cash 80000 Office equipment 26000 Common Stock 106000 (Invests $80,000 cash along with office equipment valued at $26,000 in the company in exchange for common stock.) Apr-02 prepaid rent 9000 cash 9000 (prepaid $9,000 cash for twelve months’ rent for office space) Apr-03 Office equipment 8000 Office supplies 3600 Accounts payable 11600 (made credit purchases for $8,000 in office equipment and $3,600 in office supplies) Apr-06 cash 4000 service revenue 4000 (completed services for a client and immediately received $4,000 cash) Apr-09 Accounts Receivable 6000 Service revenue 6000 (completed a $6,000 project for a client on account) Apr-13 Accounts payable 11600 cash 11600 (paid $11,600 cash to settle the account payable created on April 3.) Apr-19 prepaid incurance 2400 cash 2400 ( paid $2,400 cash for the premium on a 12-month insurance policy) Apr-22 cash 4400 Accounts receivable 4400 (received $4,400 cash as partial payment for the work completed on April 9.) Apr-25 Accounts receivable 2890 Service revenue 2890 (completed work for another client for $2,890 on credit.) Apr-28 dividend 5500 cash 5500 (paid $5,500 cash in dividends) Apr-29 office supplies 600 accounts payable 600 (purchased $600 of additional office supplies on credit.) Apr-30 Utilities expenses 435 cash 435 (paid $435 cash for this month’s utility bill.) Adjustment Entries Date Account title and explanation Debit($) Credit($) a rent expense expense 750 prepaid rent 750 (prepaid rent expired for one month) b Insurance expense 200 prepaid insurance 200 (prepaid insurance expired for one months) c Supplies expense 3000 Office supplies 3000 (supplies expense fr the month recorded) d depreciation-office equipment 500 accumulated depreciation-office equipment 500 (depreciation for one month have been charged) e accounts receivable 1800 service revenue 1800 (company has completed work for a client, but has not yet billed the $1,800 fee) f wage expense 2600 wages payable 2600 (Wages due but not paid ) Adjusted trial Balance as on 31st Dec, 2015 Debit ($) Credit ($) cash (80000-9000+4000-11600-2400+4400-5500-435) 59465 accounts receivable (6000-4400+2890+1800) 6290 office supplies (3600+600-3000) 1200 prepaid insurance (2400-200) 2200 prepaid rent (9000-750) 8250 office equipment (26000+8000) 34000 accumulated depreciation- office equipment 500 Accounts payable (11600-11600+600) 600 wagres payable 2600 common stock 106000 dividend 5500 service revenue (4000+6000+2890+1800) 14690 depreciation-office equipment 500 wages expense 2600 insurance expense 200 utilities expense 435 rent expense 750 supplies expense 3000 124390 124390 Income statement $ $ computer service revenue 14690 less: operating expenses: depreciation-office equipment 500 wages expense 2600 insurance expense 200 utilities expense 435 rent expense 750 supplies expense 3000 7485 Net Income 7205
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.