ollowing are the transactions of a new company called Pose-for-Pics. Aug. 1 Madison Harris, the owner, invested $5,250 cash and $22,575 of photography equipment in the company in exchange for common stock. 2 The company paid $2,300 cash for an insurance policy covering the next 24 months. 5 The company purchased office supplies for $998 cash. 20 The company received $3,000 cash in photography fees earned. 31 The company paid $866 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, $5,250  

Photography equipment Dr, 22,575  

        To Common stock 27,825

(Being the exchange of common stock is recorded)

On Aug 2

Prepaid insurance Dr, $2,300  

        To Cash $2,300

(Being cash paid is recorded)

On Aug 5

Office supplies Dr, $998

        To Cash $998

(Being cash paid is recorded)

Aug 20

Cash Dr, $3,000

       To Photography fees earned $3,000

(Being cash received is recorded)

On Aug 31

Utilities expense Dr, $886

        To Cash $886

(Being cash paid is recorded)

answertaxable income;