Question

1. Analyze and journalize the August transactions of Bayou Computer Service, Inc. as they occur using the Company's Chart of Accounts.

2. Post the August transactions from the general journal to the general ledger using the correct posting procedure outlined in your textbook.

3. Prepare a trial balance on a ten-column work sheet.

4. Journalize and post Adjusting Entries and complete the worksheet. Adjustment information you received from your supervisor, the Chief Accountant, follows:

A. An inventory of Office Supplies found that $XXX of supplies remained at August 31.

B. The Building Depreciation for the month of August was $350.

C. The Office Equipment Depreciation for the month of August was $167.

D. The percent-of-sales method is used to estimate Uncollectible Accounts Expense. The estimated uncollectible amount for the month is $420.

E. The estimated income tax for the month of August is $800.

F. One month of the Prepaid Insurance has expired.

G. Used $600 of the Prepaid Advertising.

H. Accrued interest revenue for the month of August on the $4,320, 10%, 90 day Notes Receivable dated August 16 is $18.

I. Accrued interest expense for one month (August) on the five year, 6%, $40,000 Note Payable dated August 4.

J. As of August 31, $1,500 of the Unearned Consulting Revenue collected in advance on August 16 was earned.

K. Accrued salary expenses for the second half of August totaled $8,000.

5. Prepare the following financial statements in good form on separate pieces of paper for each statement: Income Statement. Statement of Retained   Earnings. and the Balance Sheet.

6. Journalize and post the Closing Entries.

7. Prepare the Post-Closing Trial Balance.

Date	Transaction
Aug. 01	Issued 60,000 shares of $10 par value common stock in exchange for an initial investment of $600,000 by the owners.
Aug. 01	Prepaid $1,680 for a one-year insurance policy
Aug. 03	Issued 2,000 shares of $10 par value common stock for office equipment with a fair market value of $20,000.                                                           .
Aug. 04	Borrowed $40,000 by issuing a five-year, 6% note payable. The note called for a $8,000 annual installment payment plus interest. Record the short-term and long-term portions of the note payable in two separate accounts.
Aug. 05	Purchased Land and a Building for $114,000 cash. The Building had a fair market value of $84,000 and the Land had a fair market value of $30,000.
Aug. 06	Purchased $12,000 worth of Office Supplies on account from Kilcoyne Office Supply.
Aug. 07	Established a petty cash fund of $300.
Aug. 08	Paid $1,800 cash for an order with a local newspaper for advertising that begins on August 15 and will run for three months. The advertising was paid for on this date to obtain a lower price.
Aug. 11	Completed services for several clients and received $15,500.
Aug. 12	Completed services for customers and billed them for $12,400.
Aug. 15	Paid the semi-monthly payroll of $8,000 to the firm's part time consultants, all of which are classified as independent contractors.
Aug. 16	Received $4,800 in advance for services to be provided from August 16 through February 15. (Three months)
Aug. 16	A client billed on August 12 indicated that a $4,320 receivable due Bayou Computer Services Enterprises would not be paid for 90 days. Bayou Computer Services accepted a 10% 90-day note on this date.
Aug. 17	Declared a cash dividend of $0.10 per share on this date Payable on December 16.
Aug. 18	Paid $3,000 cash to Kilcoyne Office Supply on the August 06 account balance.
Aug. 29	Received and paid the August telephone bill of $325.
Aug. 31	Collected $5,000 of the receivable recorded on August 12.
Aug. 31	Paid $725 cash for various utility bills received for August.
Aug. 31	Recorded services rendered to clients during the last half of August that totaled $22,000. The firm collected $14,000 in cash with the balance due in 30 days.
Aug. 31	Record the entry to replenish the petty cash fund. An audit of the petty cash fund determined the following: Petty Cash Tickets: Postage                                $ 60 Freight-Out                            75 Repair Expense                    40 Miscellaneous Expense    105 Currency and Coins in Petty Cash $25

Answer 1

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Date	Account	Debit	Credit
Aug 1	Cash	$ 600,000
Aug 1	Common Stock		$ 600,000
Aug 1	Prepaid Insurance	$     1,680
Aug 1	Cash		$     1,680
Aug 3	Office Equipment	$   20,000
Aug 3	Common Stock		$   20,000
Aug 4	Cash	$   40,000
Aug 4	Long Term Notes Payable		$     8,000
Aug 4	Current Portion of Long Term Notes Payable		$   32,000
Aug 5	Land	$   30,000
Aug 5	Building	$   84,000
Aug 5	Cash		$ 114,000
Aug 6	Office Supplies	$   12,000
Aug 6	Accounts Payable		$   12,000
Aug 7	Petty Cash	$         300
Aug 7	Cash		$         300
Aug 8	Prepaid Advertising	$     1,800
Aug 8	Cash		$     1,800
Aug 11	Cash	$   15,500
Aug 11	Consulting Revenue		$   15,500
Aug 12	Accounts Receivable	$   12,400
Aug 12	Consulting Revenue		$   12,400
Aug 15	Salary Expense	$     8,000
Aug 15	Cash		$     8,000
Aug 16	Cash	$     4,800
Aug 16	Unearned Consulting Revenue		$     4,800
Aug 16	Notes Receivable	$     4,320
Aug 16	Accounts Receivable		$     4,320
Aug 17	Dividends	$     6,200		62000*0.1
Aug 17	Dividends Payable		$     6,200
Aug 18	Accounts Payable	$     3,000
Aug 18	Cash		$     3,000
Aug 29	Telephone Expense	$         325
Aug 29	Cash		$         325
Aug 31	Cash	$     5,000
Aug 31	Accounts Receivable		$     5,000
Aug 31	Utilities Expense	$         725
Aug 31	Cash		$         725
Aug 31	Cash	$   14,000
Aug 31	Accounts Receivable	$     8,000
Aug 31	Consulting Revenue		$   22,000
Aug 31	Postage Expense	$           60
Aug 31	Freight Out	$           75
Aug 31	Repair Expense	$           40
Aug 31	Miscellaneous Expense	$         105
Aug 31	Cash Over or Short		$             5
Aug 31	Cash		$         275
Adjusting Entries:
Date	Account	Debit	Credit
Aug 31	Office Supplies Expense	$     5,000
Aug 31	Office Supplies		$     5,000
	(assuming in hand 7000) 12000-7000
Aug 31	Depreciation Expense-Building	$         350
Aug 31	Accumulated Depreciation-Building		$         350
Aug 31	Depreciation Expense-Office Equipment	$         167
Aug 31	Accumulated Depreciation-Office Equipment		$         167
Aug 31	Bad Debt Expense	$         420
Aug 31	Allowance for Uncollectible Accounts		$         420
Aug 31	Income Tax Expense	$         800
Aug 31	Income Tax Payable		$         800
Aug 31	Insurance Expense	$         140		1680/12
Aug 31	Prepaid Insurance		$         140
Aug 31	Advertising Expense	$         600
Aug 31	Prepaid Advertising		$         600
Aug 31	Interest Receivable	$           18
Aug 31	Interest Revenue		$           18
Aug 31	Interest Expense	$         184		40000*6%*28/365
Aug 31	Interest Payable		$         184
Aug 31	Unearned Consulting Revenue	$     1,500
Aug 31	Consulting Revenue		$     1,500
Aug 31	Salary Expense	$     8,000
Aug 31	Salary Payable		$     8,000

Account	Date	Debit	Credit	Balance
Accounts Payable	Aug 6		$           12,000	$         12,000
	Aug 18	$            3,000		$           9,000
Accounts Receivable	Aug 12	$         12,400		$         12,400
	Aug 16		$             4,320	$           8,080
	Aug 31	$            8,000	$             5,000	$         11,080
Building	Aug 5	$         84,000		$         84,000
Cash	Aug 1	$       600,000	$             1,600	$       598,400
	Aug 4	$         40,000		$       638,400
	Aug 5		$         114,000	$       524,400
	Aug 7		$                300	$       524,100
	Aug 8		$             1,800	$       522,300
	Aug 11	$         15,500		$       537,800
	Aug 15		$           80,000	$       457,800
	Aug 16	$            4,800		$       462,600
	Aug 18		$             3,000	$       459,600
	Aug 29		$                325	$       459,275
	Aug 31	$         19,000	$             1,000	$       477,275
Cash Over	Aug 31		$                    5	$                  5
Common Stock	Aug 1		$         600,000	$       600,000
	Aug 3		$           20,000	$       620,000
Dividends	Aug 17	$            6,200		$           6,200
Dividends Payable	Aug 17		$             6,200	$           6,200
Freight Out Expense	Aug 31	$                 75		$                75
Insurance Epxense	Aug 1	$            1,600		$           1,600
Land	Aug 5	$         30,000		$         30,000
Miscellaneous Expense	Aug 31	$               105		$              105
Note Payable- Long Terms	Aug 4		$             8,000	$           8,000
Note Payable- Short Terms	Aug 4		$           32,000	$         32,000
Note Receivable	Aug 16	$            4,320		$           4,320
Office Equipment	Aug 3	$         20,000		$         20,000
Office Supplies	Aug 6	$         12,000		$         12,000
Petty Cash Fund	Aug 7	$               300		$              300
	Aug 31	$               275	$                275	$              300
Postage Expense	Aug 31	$                 60		$                60
Prepaid Advertising	Aug 8	$            1,800		$           1,800
Repair Expense	Aug 31	$                 40		$                40
Service Revenue	Aug 11		$           15,500	$         15,500
	Aug 12		$           12,400	$         27,900
	Aug 31		$           22,000	$         49,900
Telephone Expense	Aug 29	$               325		$              325
Unearned Service Revenue	Aug 16		$             4,800	$           4,800
Utilities Expense	Aug 31	$               725		$              725
Wages Expenses	Aug 15	$         80,000		$         80,000

Accounts	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit
Cash	$   549,195				$ 549,195				$ 549,195
Petty Cash	$          300				$         300				$         300
Accounts Receivable	$     11,080				$   11,080				$   11,080
Allowance for Uncollectible Accounts				$       420		$         420				$         420
Notes Receivable	$       4,320				$     4,320				$     4,320
Interest Receivable			$         18		$           18				$           18
Office Supplies	$     12,000			$    5,000	$     7,000				$     7,000
Prepaid Insurance	$       1,680			$       140	$     1,540				$     1,540
Prepaid Advertising	$       1,800			$       600	$     1,200				$     1,200
Office Equipment	$     20,000				$   20,000				$   20,000
Accumulated Depreciation-Office Equipment				$       167		$         167				$         167
Building	$     84,000				$   84,000				$   84,000
Accumulated Depreciation-Building				$       350		$         350				$         350
Land	$     30,000				$   30,000				$   30,000
Accounts Payable		$     9,000				$     9,000				$     9,000
Dividends Payable		$     6,200				$     6,200				$     6,200
Salary Payable				$    8,000		$     8,000				$     8,000
Unearned Consulting Revenue		$     4,800	$    1,500			$     3,300				$     3,300
Current Portion of Long Term Notes Payable		$   32,000				$   32,000				$   32,000
Interest Payable				$       184		$         184				$         184
Income Tax Payable				$       800		$         800				$         800
Long Term Notes Payable		$     8,000				$     8,000				$     8,000
Common Stock		$ 620,000				$ 620,000				$ 620,000
Retained Earnings						$            -
Dividends	$       6,200				$     6,200				$     6,200
Income Summary
Consulting Revenue		$   49,900		$    1,500		$   51,400		$ 51,400
Interest Revenue				$         18		$           18		$         18
Salary Expense	$       8,000		$    8,000		$   16,000		$ 16,000
Advertising Expense			$       600		$         600		$       600
Insurance Expense			$       140		$         140		$       140
Interest Expense			$       184		$         184		$       184
Telephone Expense	$          325				$         325		$       325
Utilities Expense	$          725				$         725		$       725
Postage Expense	$            60				$           60		$         60
Freight Out	$            75				$           75		$         75
Repair Expense	$            40				$           40		$         40
Miscellaneous Expense	$          105				$         105		$       105
Cash Over or Short		$             5			$            -	$             5	$          -	$           5
Office Supplies Expense			$    5,000		$     5,000		$    5,000
Depreciation Expense-Building			$       350		$         350		$       350
Depreciation Expense-Office Equipment			$       167		$         167		$       167
Bad Debt Expense			$       420		$         420		$       420
Income Tax Expense			$       800		$         800		$       800
Total	$   729,905	$ 729,905	$ 17,179	$ 17,179	$ 739,844	$ 739,844	$ 24,991	$ 51,423	$ 714,853	$ 688,421
Net Income							$ 26,432			$   26,432
Total									$ 714,853	$ 714,853