{"id":180081,"date":"2025-01-03T16:47:16","date_gmt":"2025-01-03T16:47:16","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=180081"},"modified":"2025-01-03T16:47:18","modified_gmt":"2025-01-03T16:47:18","slug":"andrea-apple-opened-apple-photography-on-january-1-of-the-current-year-2","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/01\/03\/andrea-apple-opened-apple-photography-on-january-1-of-the-current-year-2\/","title":{"rendered":"Andrea Apple opened Apple Photography on January 1 of the current year"},"content":{"rendered":"\n

Andrea Apple opened Apple Photography on January 1 of the current year. During January, the following transactions occurred and were recorded in the company’s books: 1. Andrea invested $13,500 cash in the business in exchange for common stock. 2. Andrea contributed $20,000 of photography equipment to the business in exchange for common stock. 3. The company paid $2,100 cash for an insurance policy covering the next 24 months. 4. The company received $5,700 cash for services provided during January. 5. The company purchased $6,200 of office equipment on credit. 6. The company provided $2.750 of services to customers on account. 7. The company paid cash of $1,500 for monthly rent. 8. The company paid $3,100 on the office equipment purchased in transaction #5 above. 9. Paid $275 cash for January utilities. <\/p>\n\n\n\n

The Correct Answer and Explanation is :<\/strong><\/mark><\/p>\n\n\n\n

The given transactions involve various activities in the business, such as investments, expenses, and revenue. Below is the breakdown of each transaction, its impact on the company’s financial records, and a general accounting explanation for each:<\/p>\n\n\n\n

    \n
  1. Andrea invested $13,500 cash in the business in exchange for common stock.<\/strong><\/li>\n<\/ol>\n\n\n\n
      \n
    • Impact:<\/strong> Increases cash by $13,500 and increases common stock by $13,500. This represents the initial investment by Andrea into the business.<\/li>\n<\/ul>\n\n\n\n
        \n
      1. Andrea contributed $20,000 of photography equipment to the business in exchange for common stock.<\/strong><\/li>\n<\/ol>\n\n\n\n
          \n
        • Impact:<\/strong> Increases photography equipment by $20,000 and increases common stock by $20,000. This represents a non-cash contribution, which adds to both the company’s assets and stockholder’s equity.<\/li>\n<\/ul>\n\n\n\n
            \n
          1. The company paid $2,100 cash for an insurance policy covering the next 24 months.<\/strong><\/li>\n<\/ol>\n\n\n\n
              \n
            • Impact:<\/strong> Decreases cash by $2,100 and increases prepaid insurance by $2,100. Since the policy covers the next 24 months, this is recorded as a prepaid asset and will be expensed over time.<\/li>\n<\/ul>\n\n\n\n
                \n
              1. The company received $5,700 cash for services provided during January.<\/strong><\/li>\n<\/ol>\n\n\n\n
                  \n
                • Impact:<\/strong> Increases cash by $5,700 and increases service revenue by $5,700. This represents revenue earned from services provided to customers in January.<\/li>\n<\/ul>\n\n\n\n
                    \n
                  1. The company purchased $6,200 of office equipment on credit.<\/strong><\/li>\n<\/ol>\n\n\n\n
                      \n
                    • Impact:<\/strong> Increases office equipment by $6,200 and increases accounts payable by $6,200. The company now owes money for the office equipment purchased on credit.<\/li>\n<\/ul>\n\n\n\n
                        \n
                      1. The company provided $2,750 of services to customers on account.<\/strong><\/li>\n<\/ol>\n\n\n\n
                          \n
                        • Impact:<\/strong> Increases accounts receivable by $2,750 and increases service revenue by $2,750. This represents services performed for customers who have not yet paid, creating a receivable.<\/li>\n<\/ul>\n\n\n\n
                            \n
                          1. The company paid cash of $1,500 for monthly rent.<\/strong><\/li>\n<\/ol>\n\n\n\n
                              \n
                            • Impact:<\/strong> Decreases cash by $1,500 and increases rent expense by $1,500. This is a monthly operating expense.<\/li>\n<\/ul>\n\n\n\n
                                \n
                              1. The company paid $3,100 on the office equipment purchased in transaction #5.<\/strong><\/li>\n<\/ol>\n\n\n\n
                                  \n
                                • Impact:<\/strong> Decreases cash by $3,100 and decreases accounts payable by $3,100. This is the payment made to settle part of the outstanding liability for the office equipment purchased.<\/li>\n<\/ul>\n\n\n\n
                                    \n
                                  1. Paid $275 cash for January utilities.<\/strong><\/li>\n<\/ol>\n\n\n\n
                                      \n
                                    • Impact:<\/strong> Decreases cash by $275 and increases utilities expense by $275. This is a utility payment for the month.<\/li>\n<\/ul>\n\n\n\n

                                      Summary:<\/h3>\n\n\n\n

                                      After recording all transactions, the company’s assets<\/strong> (cash, equipment, accounts receivable, prepaid insurance) and liabilities<\/strong> (accounts payable) are affected, as well as equity<\/strong> (common stock, retained earnings). The income statement<\/strong> will reflect revenue from services provided and expenses like rent and utilities.<\/p>\n","protected":false},"excerpt":{"rendered":"

                                      Andrea Apple opened Apple Photography on January 1 of the current year. During January, the following transactions occurred and were recorded in the company’s books: 1. Andrea invested $13,500 cash in the business in exchange for common stock. 2. Andrea contributed $20,000 of photography equipment to the business in exchange for common stock. 3. The […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-180081","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/180081","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=180081"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/180081\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=180081"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=180081"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=180081"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}