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Following are the transactions of a new company called Pose-for-Pics. Aug. 1 Madison Harris, the owner, invested $5,000 cash and $21,500 of photography equipment in the company in exchange for common stock. 2 The company paid $2,400 cash for an insurance policy covering the next 24 months. 5 The company purchased office supplies for $950 cash. 20 The company received $2,250 cash in photography fees earned. 31 The company paid $882 cash for August utilities. Prepare general journal entries for the above transactions.

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Answer:

Pose-for-Pics

General Journal:

August 1:

Debit Cash Account $5,000

Debit Photograph Equipment $21,500

Credit Common Stock $26,500

To record the investment of cash and equipment by Madison Harris.

August 2:

Debit Insurance Prepaid $2,400

Credit Cash Account $2,400

To record the payment for insurance for 24 months.

August 5:

Debit Office Supplies $950

Credit CAsh Account $950

To record the purchase of office supplies.

August 20:

Debit Cash Account $2,250

Credit Photography Fees Earned $2,250

To record the receipt of cash for fees.

August 31:

Debit Utilities Expense $882

Credit Cash Account $882

To record the payment of cash for August utilities.

Explanation:

The general journal entries are used to initiate the recording of business transactions as they occur on a daily basis.  While there other specialized journals, the general journal can be used to record any type of transaction.  The journal shows the accounts that are debited and credited in the general ledger.

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