Reference no: EM132500522

Question 1: Please explain how to prepare journal entries to record the July transactions

During its first month of operation, the Quick Tax Corporation, which specializes in tax preparation, completed the following transactions.

July 1 Began business by making a deposit in a company bank account of $40,000, in exchange for 4,000 shares of $10 par value common stock.

July 3 Paid the current month's rent, $2,500

July 5 Paid the premium on a 1-year insurance policy, $3,600

July 7 Purchased supplies on account from Little Company, $700.

July 10 Paid employee salaries, $2,800

July 14 Purchased equipment from Lake Company, $9,500. Paid $1,500 down and the balance was placed on account. Payments of $500 will be due until the balance is paid in full. The first payment is due 8/1. Note: Use accounts payable for the balance due.

July 15 Received cash for preparing tax returns for the first half of July, $6,500

July 19 Made payment on account to Lake Company, $500.

July 31 Received cash for preparing tax returns for the last half of July, $8,250

The following have to be used the following account names for journal entries.

Chart of Accounts: Account Title (Normal Balance)

Assets

Cash (Debit)

Prepaid Insurance (Debit)

Supplies (Debit)

Equipment (Debit)

Accumulated Depreciation - Equipment (Credit)

Liabilities

Accounts Payable (Credit)

Income Tax Payable (Credit)

Stockholders' Equity

Common Stock (Credit)

Retained Earnings (Credit)

Dividends (Debit)

Revenue

Tax Preparation Revenue (Credit)

Expenses

Rent Expense (Debit)

Salaries Expense (Debit)

Insurance Expense (Debit)

Supplies Expense (Debit)

Depreciation Expense (Debit)

Income Tax Expense (Debit)

Question 2: Prepare journal entries to record the July transactions in the General Journal .