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Tilton Corporation has the following transactions during August of the current year
Tilton Corporation has the following transactions during August of the current year. Aug. 1 Issues shares of common stock to investors in exchange for $10,000. 4 Pays Insurance in advance for 3 months, $1,500. 16 Receives $900 from clients for services rendered. 27 Pays the secretary $620 salary. Journalize the transactions. (If no entry is required, select "No Entry" for the account titles and enter for the amounts. Credit account amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit Aug. 1 The asset Cash is increased 10000 The stockholders equity account common stock is 10000 Aug. 4 X The asset prepaid insurance is increased 1500 the asset Cash is decreased 1500 Aug. 16 x The asset Cash is increased 900 M 900 the revenue Service revenue is increased * The expense salaries expense is increased 620 Aug. 27 620 the asset cash is decreased
Expert Solution
Journal of Tilton Corporation
| Date | Account Titles and Explanation | Debit | Credit |
| Aug 1 | Bank | 10000 | |
| Common Stock | 10000 | ||
| Aug 4 | Insurance | 1500 | |
| Bank | 1500 | ||
| Aug 16 | Bank | 900 | |
| Service Revenue | 900 | ||
| Aug 27 | Salaries | 620 | |
| Bank | 620 |
Comment-
Since in question there was no space for Expalanation, only title of accounts should be written in given column "Account Titles and Explanation". While entring in journal it is presumed that Tilton Corporation is Operating through Bank instead of Cash.
Entry 1 (Aug 1) - In issue of share, the liablity of capital will be increased as well as Bank Balance.
Entry 2 (Aug 4) - Since the prepaid expenses are related to current accounting year, these are treated as normal expenses. Expenses are debited and Bank balance which was reduced will be credited.
Entry 3 (Aug 16) - It is presumed that no sepearte entry is made for service is rendered to client. Here bank balance is increased So that will be debited and Income account "Service Revenue" will be created.
Entry 4 (Aug 27) - Salaries is expenses account so that will be debited and Bank balance which was reduced will be credited.
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