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Following are the transactions of a new company called Pose-for-Pics. Aug. 1 Madison Harris, the owner, invested $12,000 cash and $51,600 of photography equipment in the company in exchange for common stock. 2 The company paid $3,900 cash for an insurance policy covering the next 24 months. 5 The company purchased office supplies for $2,280 cash. 20 The company received $3,700 cash in photography fees earned. 31 The company paid $878 cash for August utilities. Prepare general journal entries for the above transactions.

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Answer and Explanation:

The journal entries are shown below:

(i) On August 1,

Cash A/c Dr. $12,000

photography equipment A/c Dr. $51,600  

             To common stock   $63,600

(Being the issuance of common stock for cash and photography equipment is recorded)

(ii) On August 2,

Prepaid insurance A/c Dr. $3,900

           To cash $3,900

(Being the cash paid in advance for insurance is recorded)  

(iii) On August 5,  

Office supplies A/c Dr. $2,280  

          To cash                       $2,280

(Being the cash paid for office supplies is recorded)

(iv) On August 20,

Cash A/c Dr. $3,700

     To photography fees earned $3,700

(Being the photography fees earned is recorded)

(v) On August 31,

Utilities A/c Dr. $878

      To cash A/c    $878

(Being the cash paid for utilities)