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.

Question

Business

Layne Hendricks

27 October, 21:43

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.

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Answers (1)

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Jordon Rowe · Answer 1

Missing information:

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.

Journalize, and prepare income statement and balance sheet

Answer:

Apr. 1 Tanner invests $80,000 cash along with office equipment valued at $26,000 in the company in exchange for common stock.

Dr Cash 80,000

Cr Common stock 80,000

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.

Dr Prepaid rent 9,000

Cr Cash 9,000

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.

Dr Equipment 8,000

Dr Supplies 3,600

Cr Accounts payable 11,600

Apr. 6 The company completed services for a client and immediately received $4,000 cash.

Dr Cash 4,000

Cr Service revenue 4,000

Apr. 9 The company completed a $6,000 project for a client, who must pay within 30 days.

Dr Accounts receivable 6,000

Cr Service revenue 6,000

Apr. 13 The company paid $11,600 cash to settle the account payable created on April 3.

Dr Accounts payable 11,600

Cr Cash 11,600

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.

Dr Prepaid insurance 2,400

Cr Cash 2,400

Apr. 22 The company received $4,400 cash as partial payment for the work completed on April 9.

Dr Cash 4,400

Cr Accounts receivable 4,400

Apr. 25 The company completed work for another client for $2,890 on credit.

Dr Accounts receivable 2,890

Cr Service revenue 2,890

Apr. 28 The company paid $5,500 cash in dividends.

Dr Dividends 5,500

Cr Cash 5,500

Apr. 29 The company purchased $600 of additional office supplies on credit.

Dr Supplies 600

Cr Accounts payable 600

Apr. 30 The company paid $435 cash for this month's utility bill.

Dr Utilities expense 435

Cr Cash 435

Adjusting entries:

a) On April 2, the company prepaid $9,000 cash for twelve months' rent for office space.

Dr Rent expense 750

Cr Prepaid rent 750

b) The balance in Prepaid insurance represents the premium paid for a 12-month insurance policy the policy's coverage began on April 1.

Dr Insurance expense 200

Cr Prepaid insurance 200

c) Office supplies on hand as of April 30 total $1,200.

Dr Supplies expense 3,000

Cr Supplies 3,000

d) Straight-line depreciation of office equipment, based on a 5-year life and a $4,000 salvage value, is $500 per month.

Dr Depreciation expense 500

Cr Accumulated depreciation - equipment 500

e) The company has completed work for a client, but has not yet billed the $1,800 fee.

Dr Accrued income 1,800

Cr Service revenue 1,800

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

Dr Wages expense 2,600

Cr Wages payable 2,600

Linkworks

Income Statement

For the month ended April 30th, 202x

Service revenue $14,690

Wages expense ($2,600)

Supplies expense ($3,000)

Depreciation expense ($500)

Insurance expense ($200)

Rent expense ($750)

Utilities expense ($435)

Net income $7,205

retained earnings = $7,205 - $5,500 (dividends) = $1,705

Linkworks

Balance Sheet

For the month ended April 30th, 202x

Assets:

Cash $59,465

Accounts receivable $4,490

Accrued income $1,800

Prepaid rent $8,250

Prepaid insurance $2,200

Supplies $1,200

Equipment net $7,500

Total assets: $84,950

Liabilities and stockholders' equity:

Accounts payable $600

Wages payable $2,600

Common stock $80,000

Retained earnings $1,705

Total liabilities and stockholders' equity: $84,905