Question

JUST RECORD THE ADJUSTMENT ENTRIES BELOW RECORD THE JOURNAL ENTERIES IN ORDER THEY ARE PRESENTED IN THE PROBLEM

At June 30, 2018, the end of its most recent fiscal year, River Consultants Ltd.’s post-closing trial balance was as follows:

		Debit		Credit
Cash		$15,700
Accounts receivable		1,300
Supplies		700
Accounts payable				$300
Income tax payable				400
Unearned revenue				1,000
Common shares				3,400
Retained earnings				12,600
		$17,700		$17,700

The company underwent a major expansion in July. New staff was hired and more financing was obtained. River conducted the following transactions during July 2018.

July 3		Issued $11,000 of common shares for cash.
4		Purchased insurance coverage for a year, $3,960.
5		Paid the first two (July and August 2018) months’ rent for an annual lease of office space for $3,700 per month. (Hint: Use the Prepaid Rent account.)
6		Purchased $3,800 of supplies for cash.
6		Purchased equipment, paying $4,400 cash and signing a two-year bank loan for $19,600. The equipment has a four-year useful life. The bank loan has a 6% interest rate, which is payable on the first day of each following month.
10		Visited client offices and agreed on the terms of a consulting project. River will invoice the client, Connor Productions Ltd., on the 19th of each month for work performed.
12		Collected $1,300 on account from Milani Brothers Ltd. This client was invoiced in June when the service was provided.
13		Completed services for Mactaquac Inc. This client paid $1,000 in advance last month. All services relating to this payment are now completed. (Hint: Use the Fees Earned account.)
16		Paid salaries for the first half of the month, $11,100
17		Paid a utility bill of $300. This related to June utilities that were accrued at the end of June.
18		Met with a new client, Bay Technologies. Received $11,600 cash in advance for future work to be performed.
19		Invoiced Connor Productions for $27,500 of consulting fees provided on account. (Hint: Use the Fees Earned account.)
20		Received an invoice for legal advice, $2,000. The amount is not due until August 20. (Hint: Use the Professional Fees Expense account.)
23		Completed the first phase of the project for Bay Technologies Ltd. Recognized $10,100 of revenue from the cash advance previously received (see July 18 transaction).
25		Paid $400 income tax payable owing at the end of June, in addition to $1,000 for the July income tax instalment.
27		Received $15,700 cash from Connor Productions in partial payment of the invoice issued on July 19.
		30 Declared and paid a $5,000 dividend. River Consultants records adjustments monthly. Adjustment data for the month of July are as follows: 1. Expiry of insurance coverage (see July 4 transaction) 2. Adjustment of prepaid rent (see July 5 transaction) 3. Supplies used, $1,300 (see July 6 transaction) 4. Equipment depreciation, using the straight-line method of depreciation (see July 6 transaction) 5. Accrual of interest on bank loan (see July 6 transaction) 6. Salaries for the second half of July, $11,100, to be paid on August 1 7. Estimated utilities expense for July, $800 (invoice to be received in August)

Answer 1

Solution

River Consultants Ltd

Journal Entries

Date	Account Titles and Explanation		Debit	Credit
3-Jul	Cash		$11,000
	Common Shares			$11,000
	(To record issue of common shares)
4-Jul	Prepaid Insurance		$3,960
	Cash			$3,960
	(To record prepaid insurance)
5-Jul	Prepaid Rent		$7,400
	Cash			$7,400
	(To record prepaid rent)
6-Jul	Supplies		$3,800
	Cash			$3,800
	(To record purchase of supplies)
6-Jul	Equipment		$24,000
	Cash			$4,400
	Notes Payable			$19,600
	(To record purchase of equipment partly using cash and notes payable)
10-Jul	No Entry
12	Cash		$1,300
	Accounts Receivable			$1,300
	(To record accounts receivables collected)
13	Unearned Revenues		$1,000
	Fees Earned			$1,000
	(To record service completed on fees paid in advance)
16	Salaries Expense		$11,100
	Cash			$11,100
	(To record salaries paid)
17	Utility Payable		$300
	Cash			$300
	(To record utility due paid)
18	Cash		$11,600
	Unearned Revenues			$11,600
	(To record advance fees received)
19	Accounts Receivable		$27,500
	Fees Earned			$27,500
	(to record consulting services performed)
20	Professional Fees Expense		$2,000
	Professional Fees Payable			$2,000
	(To record legal fees due but not paid)
23	Unearned Revenues		$10,100
	Fees Earned			$10,100
	(Services delivered for fees paid in advance)
25	Income Tax Expense		$1,000
	Income Tax Payable		$400
	Cash			$1,400
	To record payment of income tax dues and income tax expense)
27	Cash		$15,700
	Accounts Receivable			$15,700
	(To record receipt of payment from accounts receivable)
30	Dividends		$5,000
	Cash			$5,000
	(To record dividends paid)