Following Are The Transactions Of A New Company Called Pose

Following Are The Transactions Of A New Company Called Pose For Picsa

Following are the transactions of a new company called Pose-for-Pics. Aug. 1 Madison Harris, the owner, invested $7,250 cash and $31,175 of photography equipment in the company. 2 The company paid $3,200 cash for an insurance policy covering the next 24 months. 5 The company purchased office supplies for $1,378 cash. 20 The company received $3,800 cash in photography fees earned. 31 The company paid $885 cash for August utilities. Prepare general journal entries for the above transactions.

Sample Paper For Above instruction

Introduction

The accurate recording of transactions is fundamental in accounting as it ensures the integrity and reliability of a company’s financial statements. For the newly established company Pose-for-Pics, the initial transactions reflect typical business activities, including owner investments, expenses, and revenue recognition. This paper details the journal entries for each transaction and discusses the importance of proper accounting procedures in establishing a clear financial record.

Journal Entries for Pose-for-Pics Transactions

On August 1, Madison Harris, the owner, invested cash and equipment into the business. This investment increases both the assets and the owner’s equity. The journal entry is:

Aug. 1 — Investment by owner

This entry records the cash received and equipment contributed, along with the corresponding increase in owner’s capital.

Subsequently, on August 2, the company paid $3,200 for an insurance policy covering the next 24 months. This expense setup involves recognizing a prepaid asset:

Aug. 2 — Purchased insurance policy

This records the payment made for the insurance policy, which will be expensed over time as coverage is utilized.

On August 5, office supplies were purchased for $1,378 cash:

Aug. 5 — Purchase of office supplies

This transaction increases office supplies assets and decreases cash.

On August 20, the company earned $3,800 in photography fees, which increases cash and revenue:

Aug. 20 — Photography services revenue

This recognizes the income earned from photography services provided.

Lastly, on August 31, the company paid $885 for utilities:

Aug. 31 — Payment for utilities

This records the utility expense incurred during August.

Discussion on Accounting Accuracy and Business Impact

Properly recording these transactions provides a clear financial picture. The initial investment establishes the capital account, reflecting the owner’s stake. Expenses such as insurance, supplies, and utilities are recorded as they occur to match revenues accurately, following the matching principle. Revenue recognition when services are performed ensures income reflects actual business activity.

Accurate journal entries facilitate reliable financial reports, which are essential for decision-making, securing financing, and assessing business performance. For startups like Pose-for-Pics, establishing accurate initial records builds a foundation for growth and compliance with accounting standards.

Conclusion

The journal entries prepared for Pose-for-Pics’ transactions demonstrate fundamental accounting principles, including recording investments, expenses, and revenues. These entries ensure the company’s financial statements correctly reflect its transactions, supporting effective management and strategic planning.

References

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