Following are the transactions of a new company called Pose-for-Pics. Aug. 1 Madison Harris, the owner, invested $14,000 cash and $60,200 of photography equipment in the company. 2 The company paid $3,600 cash for an insurance policy covering the next 24 months. 5 The company purchased office supplies for $2,660 cash. 20 The company received $3,850 cash in photography fees earned. 31 The company paid $871 cash for August utilities. Prepare general journal entries for the above transactions.

Answer and Explanation:

The journal entries are shown below:

On Aug 1

Cash Dr $14,000

Photography equipment $60,200

         To Common stock $74,200

(Being the common stock is exchanged)

On Aug 2

Prepaid insurance Dr $3,600

       To Cash $3,600

(Being the cash paid is recorded)

On Aug 5

Office supplies Dr $2,660

       To Cash $2,660

(Being the cash paid is recorded)

On Aug 20

Cash Dr $3,850

    To Photography fees earned $3,850

(Being cash received is recorded)

On Aug 31

Utilities Dr $871

      To Cash $871

(Being cash paid is recorded)