Question

Larkspur, Inc. was opened on August 1 by Joe Larkspur. The following selected events and transactions occurred during August. Aug. 1 Invested $57,000 cash in the business in exchange for common stock. 3 Purchased O’Brien’s Tree Service for $36,600 cash. The price consists of land $19,000, building $15,000, and equipment $2,600. (Make one compound entry.) 5 Advertised the opening of the business, paying advertising expenses of $1,400. 6 Paid cash $1,240 for a one-year insurance policy. 10 Purchased equipment for $2,100 from Crane Company, payable in 30 days. 18 Received fees for services of $1,400 in cash. 25 Declared and paid a $750 cash dividend. 30 Paid wages of $1,900. 30 Paid Crane Company in full. 31 Received $650 of fees in cash.

Journallze the August transactions.

Answer 1

Answer and Explanation:

The journal entries are shown below:

On Aug 1

Cash $57,000

To Common Stock $57,000

(Being the issuance of the common stock is recorded)

On Aug 3

Land $19,000

Building $15,000

Equipment $2,600

To Cash $36,600

(Being the assets purchased is recorded)

On Aug 5

Advertising expense $1,400

To Cash $1,400

(Being advertising expense is recorded)

On Aug 6

Prepaid insurance $1,240

To Cash $1,240

(Being prepaid insurance is recorded)

On Aug 10

Equipment $2,100

to Account payable $2,100

(being equipment purchase is recorded)

On Aug 18

Cash $1,400

To Service revenue $1,400

(Being service revenue is recorded)

On Aug 25

Cash dividend $750

To Cash $750

(being the dividend paid is recorded)

On Aug 30

Salaries and Wages expense $1,900

To Cash $1,900

(Being the wages paid is recorded)

On Aug 30

Account payable $2,100

To Cash $2,100

(Being the amount paid is recorded)

On Aug 30

Cash $650

To Service revenue $650

(Being service revenue is recorded)