Question

On January 1, 2018, Red Flash Photography had the following balances: Cash, $21,000; Supplies, $8,900; Land, $69,000; Deferred Revenue, $5,900; Common Stock $59,000; Retained Earnings, $34,000. During 2018, the company had the following transactions:

(1) Issue additional shares of common stock, $29,000.
(2) Provide services to customers for cash, $44,000, and on account, $39,000.
(3) Pay salaries to employees for work in 2018, $32,000.
(4) Purchase rental space for one year, $21,000.
(5) Purchase supplies on account, $31,000.
(6) Pay dividends, $2,900.

The following information is available on December 31, 2021:

Employees are owed an additional $4,900 in salaries.
Three months of the rental space has expired.
Supplies of $5,900 remain on hand.
All of the services associated with the beginning deferred revenue have been performed.
(1) Record each of the transactions listed above in the 'General Journal' tab. Review the 'General Ledger' and the 'Trial Balance' tabs to see the effect of the transactions on the account balances.

Answer 1

Answer:

See explanation

Explanation:

Red Flash Photography

Journal Entries

1. Debit     Cash                 $29,000

Credit       Common Stock               $29,000

(issuing common stock for cash that will increase the cash)

2. Debit    Cash                               $44,000

   Debit    Accounts Receivable    $39,000

 Credit           Service Revenue                   $83,000

(Provided services on account and cash)

3. Debit    Salaries expense            $32,000

Credit               Cash                                     $32,000

(Paid salaries to workers)

4. Debit    Prepaid Rent                   $21,000

Credit               Cash                                     $21,000

(Paid rent in advance for cash)

5. Debit    Supplies                          $31,000

Credit                  Accounts payable            $31,000

(Purchase supplies on account means liability will increase)

6. Debit    Dividends                        $2,900

Credit                   Cash                                 $2,900

(Paid cash dividends to the shareholders)