Karla Tanner opens a Web consulting business called Linkworks and completes the
ID: 2597170 • Letter: K
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 $90,000 cash along with office equipment valued at $21,600 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 $10,800 in office equipment and $2,160 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 $7,200 project for a client, who must pay within 30 days. 13 The company paid $12,960 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 $5,760 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 $720 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); Common Stock (307); Dividends (319); 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.
Explanation / Answer
Date Account Titles and Explanation Debit Credit April. 1 Cash 90000 Office equipment 21600 Common stock 111600 (To record capital invested) 2 Prepaid rent 7200 Cash 7200 (To record rent paid for 1 year) 3 Office equipment 10800 Office supplies 2160 Accounts payable 12960 (To record on account purchases) 6 Cash 2000 Services revenue 2000 (To record cash received for services) 9 Accounts receivable 7200 Services revenue 7200 (To record services on account) 13 Accounts payable 12960 Cash 12960 (To record payment on account) 19 Prepaid insurance 6000 Cash 6000 (To record premium paid for 12 months) 22 Cash 5760 Accounts receivable 5760 (To record collection on account) 25 Accounts receivable 2640 Services revenue 2640 (To record services on account) 28 Dividends 6200 Cash 6200 (To record cash dividends paid) 29 Office supplies 720 Accounts payable 720 (To record on account purchases) 30 Utility expenses 700 Cash 700 (To record utility expenses paid) Cash (101) Accounts Receivable (106) April. 1 90000 April. 2 7200 April. 9 7200 April. 22 5760 April. 6 2000 April. 13 12960 April. 25 2640 April. 22 5760 April. 19 6000 April. 28 6200 April. 30 Bal 4080 April. 30 700 April. 30 Bal 64700 Office Supplies (124) Prepaid Insurance (128) April. 3 2160 April. 19 6000 April. 20 720 April. 30 Bal 2880 April. 30 Bal 6000 Prepaid Rent (131) Office Equipment (163) April. 2 7200 April. 1 21600 April. 3 10800 April. 30 Bal 7200 April. 30 Bal 32400 Accounts Payable (201) Common Stock (307) April. 13 12960 April. 3 12960 April. 1 111600 April. 20 720 April. 30 Bal 720 April. 30 Bal 111600 Dividends (319) Services Revenue (403) April. 28 6200 April. 6 2000 April. 9 7200 April. 30 Bal 6200 April. 25 2640 April. 30 Bal 11840 Utilities Expense (690) April. 30 700 April. 30 Bal 700 Linkworks Trial Balance April 30 Account No. Account Title Debit Credit 101 Cash 64700 106 Accounts receivable 4080 124 Office supplies 2880 128 Prepaid insurance 6000 131 Prepaid rent 7200 163 Office equipment 32400 201 Accounts payable 720 307 Common stock 111600 319 Dividends 6200 403 Services revenue 11840 690 Utilities expense 700 Totals $ 124160 124160
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