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Required information [The following information applies to the questions displayed below.] Following are the transactions of a new company called Pose-for-Pics. Aug. 1 Madison Harris, the owner, invested $8,200 cash and $35,200 of photography equipment in the company in exchange for common stock. 2 The company paid $3,800 cash for an insurance policy covering the next 24 months. 5 The company purchased office supplies for $1,050 cash. 20 The company received $5,031 cash in photography fees earned. 31 The company paid $845 cash for August utilities. Prepare general journal entries for the above transactions.

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Answer:

Pose-for-Pics

General Journal Entries:

Aug. 1:

Debit Cash $8,200

Debit Equipment $35,200

Credit Common Stock $43,400

To record the issue of common stock for cash and equipment.

Aug. 2:

Debit Prepaid Insurance $3,800

Credit Cash Account $3,800

To record the payment of insurance covering 24 months.

Aug. 5:

Debit Office Supplies $1,050

Credit Cash Account $1,050

To record the payment for office supplies.

Aug. 20:

Debit Cash Account $5,031

Credit Photography Fees $5,031

To record fees earned.

Aug. 31:

Debit Utilities $845

Credit Cash Account $845

To record payment for August Utilities.

Explanation:

General Journal entries are made to record business transactions as they occur on a daily basis.  Journal entries show the General Ledger accounts to be debited and the ones to be credited.  They form the initial records of any business transactions.

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