The company made credit purchases for 8000 in office


Karla Tanner opens a web consulting business called Link works 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.

The following are the only entries that need adjusted:

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.

 

Wages due to employees, but not yet paid, as of April 30 total $2,600.

And then entered into a balance sheet.

Solution Preview :

Prepared by a verified Expert
Financial Accounting: The company made credit purchases for 8000 in office
Reference No:- TGS01220191

Now Priced at $12 (50% Discount)

Recommended (99%)

Rated (4.3/5)