Question

Culver Corporation has the following transactions during August of the current year.

Aug. 1 Issues shares of common stock to investors in exchange for $10,750.
4 Pays insurance in advance for 3 months, $1,150.
16 Receives $710 from clients for services rendered.
27 Pays the secretary $590 salary.

Required:
Journalize the transactions.

Answer 1

Answer:

Journal Entries

Aug. 1

Cash $10,750 (debit)

Common Stock $10,750 (credit)

Aug 4

Insurance Prepaid $1,150 (debit)

Cash $1,150 (credit)

Aug 16

Cash $710 (debit)

Sales Revenue $710 (credit)

Aug 27

Salaries Expense $590 (debit)

Cash $590 (credit)

Explanation:

Note that insurance paid in advance is an asset. The asset account title of Insurance Prepaid must be used.