Question: Recording Journal Entries Ryan Olson organized Me Too, a company providing online networking management services on MySpace, Face book, Friendster, and other electronic social networks. Ryan believes that college and high school students make up his target market. You have been hired to record the transactions occurring in the first two weeks of operations, beginning May 1, 2010.
a. May 1 Received $30,000 cash from Ryan Olson to establish the sole proprietorship.
b. May 1 Borrowed $50,000 from the bank to provide additional funding to begin operations; the note is due in two years.
c. May 1 Paid $2,400 for a one-year fire insurance policy (recorded as Prepaid Insurance).
d. May 3 Purchased furniture and fixtures for the store for $15,000 on account. The amount is due within 30 days.
e. May 5 Placed advertisements in local college newspapers for a total of $250 cash.
f. May 9 Sold services for $400 cash.
g. May 14 Made full payment for the furniture and fixtures purchased on account on May 3.
Required: For each transaction, prepare a journal entry. If no entry is needed, explain why. Be sure to categorize each account as an asset (A), liability (L), owner's equity (OE), revenue (R), or expense (E).