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Record the journal entry for each transaction below. Reference each transaction by date:

a. On September 1, Pat Hopkins established Ona Cloud Corporation (OCC) as a provider of cloud computing services.
b. Pat contributed $15,000 for 1,500 shares of OCC.
c. On September 8, OCC borrowed $23,000 from a bank, promising to repay the bank in two years.
d. On September 10, OCC wrote a check for $20,500 to acquire computer equipment.
e. On September 15, OCC received $1,650 of supplies purchased on account and, on September 16, paid $2,250 for September rent. Through September 22, OCC provided its customers $10,250 of services, of which OCC collected $7,500 in cash.
f. On September 28, OCC paid $325 for Internet and phone service this month.
g. On September 29, OCC paid wages of $5,650 for the month.

Finally, on September 30, OCC submitted its electricity meter reading online and determined that the total charges for the month will be $730. This amount will be paid on October 14 through a preauthorized online payment.

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Answer:

Ona Cloud Corporation (OCC)

Journal Entries:

a. September 1:

Establishment of Ona Cloud Corporation.

b. September 1:

Debit Cash Account $15,000

Credit Common Stock $15,000

To record the common stock contributed by Pat Hopkins.

c. September 8:

Debit Cash Account $23,000

Credit Notes Payable $23,000

To record the bank loan payable in two years' time.

d. September 10:

Debit Equipment $20,500

Credit Cash Account $20,500

To record the purchase of computer equipment.

e. September 15:

Debit Supplies $1,650

Credit Accounts Payable $1,650

To record the purchase of supplies on account.

e. September 16:

Debit Rent Expense $2,250

Credit Cash Account $2,250

To record the payment for September rent.

e. September 22;

Debit Cash $7,500

Debit Accounts Receivable $2,750

Credit Service Revenue $10,250

To record the provision of services through September 22.

f. September 28:

Debit Utilities Expense $325

Credit Cash Account $325

To record payment for internet and phone service for the month.

g. September 29:

Debit Wages Expense $5,650

Credit Cash Account $5,650

To record the payment of wages for the month.

i. September 30:

Debit Utilities Expense $730

Credit Utilities Payable $730

To accrue unpaid electric utilities bill for the month.

Explanation:

Ona uses the general journal to record its business transactions initially as they occur from one day to another.  Journal entries identify the accounts involved in each transaction.  It records the account to be debited and the account to be credited in the general ledger.

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