The transactions completed by PS Music during June 2018 were described at the end of Chapter 1. The following transactions were completed during July, the second month of the business's operations:
July 1. Peyton Smith made an additional investment in PS Music in exchange for common stock by depositing $5,000 in PS Music's checking account.
1 Instead of continuing to share office space with a local real estate agency, Peyton decided to rent office space near a local music store. Paid rent for July, $1,750. 1. Paid a premium of $2,700 for a comprehensive insurance policy covering liability, theft, and fire. The policy covers a one-year period.
2. Received $1,000 on account.
3. On behalf of PS Music, Peyton signed a contract with a local radio station, KXMD, to provide guest spots for the next three months. The contract requires PS Music to provide a guest disc jockey for 80 hours per month for a monthly fee of $3,600. Any additional hours beyond 80 will be billed to KXMD at $40 per hour. In accordance with the contract, Peyton received $7,200 from KXMD as an advance payment for the first two months. 3. Paid $250 on account.
4. Paid an attorney $900 for reviewing the July 3 contract with KXMD. (Record as Miscellaneous Expense)
5. Purchased office equipment on account from Office Mart, $7,500.
8. Paid for a newspaper advertisement, $200.
11 Received $1,000 for serving as a disc jockey for a party
13. Paid $700 to a local audio electronics store for rental of digital recording equipment.
14. Paid wages of $1,200 to receptionist and part-time assistant. Enter the following transactions on Page 2 of the two-column journal:
16. 18. 21. 22. Received $2,000 for serving as a disc jockey for a wedding reception. Purchased supplies on account, $850. Paid $620 to Upload Music for use of its current music demos in making various music sets. Paid $800 to a local radio station to advertise theservices of PS Music twice daily for the remainder of July 23. Served as disc jockey for a party for $2500. Received $750, with the remainder due August 4, 2018
27. Paid electric bill, $915.
28. Paid wages of $1200 to receptionist and part-time assistant.
29. Paid miscellaneous expenses, $540. 30. Served as a disc jockey for a charity ball for $1,500. Received $500, with the remainder due on August 9, 2018. 31 Received $3,000 for serving as a disc jockey for a party 31. Paid $1,400 royalties (music expense) to National Music Clearing for use of various artists' music during July. Paid dividends, $1,250. 31.

Question Completion:

Journalize the transactions.

PS Music

Journal Entries:

July 1 Debit Cash $5,000

Credit Common Stock $5,000

To record the additional investment by Peyton Smith.

July 1: Debit Rent Expense $1,750

Credit Cash $1,750

To record the payment of rent for July.

July 1: Debit Prepaid Insurance $2,700

Credit Cash $2,700

To record the prepayment of insurance premium for one year.

July 2: Debit Cash $1,000

Credit Service Revenue $1,000

To record the receipt of cash on account.

July 3: Debit Cash $7,200

Credit Service Revenue $3,600

Credit Unearned Service Revenue $3,600

To record the receipt of service revenue for July and August.

July 3: Debit Accounts Payable $250

Credit Cash $250

To record payment on account.

July 4: Debit Miscellaneous Expense $900

Credit Cash $900

To record the payment contract review by an attorney.

July 5: Debit Office Equipment $7,500

Credit Accounts Payable (Office Mart) $7,500

To record purchase of office equipment on account.

July 8: Debit Advertising Expense $200

Credit Cash $200

To record the payment for a newspaper advertisement.

July 11: Debit Cash $1,000

Credit Service Revenue $1,000

To record the receipt of cash for services.

July 13: Debit Equipment Rental Expense $700

Credit Cash $700

To record the payment for rental of digital recording equipment.

July 14: Debit Wages Expense $1,200

Credit Cash $1,200

To record the payment of wages.

July 16: Debit Cash $2,000

Credit Service Revenue $2,000

To record the receipt of cash for services.

July 18: Debit Supplies $850

Credit Accounts Payable $850

To record the purchase of supplies on account.

July 21: Debit Music Expense $620

Credit Cash $620

To record the payment of cash for uploading music.

July 22: Debit Advertising Expense $800

Credit Cash $800

To record the payment for advertising expense.

July 23: Debit Cash $750

Debit Accounts Receivable $1,750

Credit Service Revenue $2,500

To record service revenue earned for cash and on account.

July 27: Debit Utilities Expense $915

Credit Cash $915

To record the payment of electric bill.

July 28: Debit Wages Expense $1,200

Credit Cash $1,200

To record the payment of wages.

July 29: Debit Miscellaneous Expense $540

Credit Cash $540

To record the payment of miscellaneous expense.

July 30: Debit Cash $500

Debit Accounts Receivable $1,000

Credit Service Revenue $1,500

To record service revenue earned for cash and on account.

July 31: Debit Cash $3,000

Credit Service Revenue $3,000

To record the receipt of cash for services.

July 31: Debit Music Expense $1,400

Credit Cash $1,400

To record the payment of royalties.

July 31: Debit Dividends $1,250

Credit Cash $1,250

To record the payment of dividends to the stockholder.

Explanation:

Journal entries are the first records made to record business transactions as they occur on a daily basis.  They identify the accounts involved in each transaction and the ones to be debited and credited respectively.