The following transactions occur for Cardinal Music Academy during the month of October: a. Provide music lessons to students for $7,500 cash. Purchase prepaid insurance to protect musical equipment over the next year for $3,060 cash.
b. Purchase musical equipment for $10,500 cash. Obtain a loan from a bank by signing a note for $11,000.
d. Obtain a loan from a bank by signing a note for $20,000.

Required:
Record the transactions.

Answer and Explanation:

The journal entries are shown below;

a. cash Dr $7,500  

    To Service revenue $7,500  

(To record the cash receipts )  

Prepaid insurance $3,060  

   To cash $3,060  

(To record the cash paid )  

b. Musical equipment Dr $10,500

   To cash $10,500

(To record the cash paid )

Cash Dr $11,000

     To note payable $11,000

(To record the receipt of the loan )

d. Cash Dr $20,000

     To note payable $20,000

(To record the receipt of the loan )

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