Question

*Create a General Journal, Worksheet, Income Statement, Changes in Retained Earnings, Balance Sheet, Data for General Ledger and also make a Ledger.*

Byte of Accounting, Inc.

Transaction Description of transaction

01. June 1: Byte of Accounting, Inc. issued 2,610 shares of its common stock to Jeremy after $29,160 in cash and computer equipment with a fair market value of $41,310 were received.

02. June 1: Byte of Accounting, Inc. issued 2,645 shares of its common stock after acquiring from Courtney $58,050 in cash, computer equipment with a fair market value of $12,420 and office equipment with a fair value of $945.

03. June 1: Byte of Accounting, Inc. acquired $59,400 in cash from Wes and issued 2,200 shares of its common stock.

04. June 2: A down payment of $29,000 in cash was made on additional computer equipment that was purchased for $145,000. A five-year note was executed by Byte for the balance.

05. June 4: Additional office equipment costing $700 was purchased on credit from Discount Computer Corporation.

06. June 8: Unsatisfactory office equipment costing $140 was returned to Discount Computer for credit to be applied against the outstanding balance owed by Byte.

07. June 10: Byte paid $22,250 on the balance it owed on the June 2 purchase of computer equipment.

08. June 14: A one-year insurance policy covering its computer equipment was purchased by Byte for $6,312 in cash. The effective date of the policy was June 16.

09. June 16: Computer consultation revenue of $7,000 was received.

10. June 16: Byte purchased a building and the land it is on for $101,000, to house its repair facilities and to store computer equipment. The lot on which the building is located is valued at $16,000. The balance of the cost is to be allocated to the building. Byte made a cash down payment of $10,100 and executed a mortgage for the balance. The mortgage is payable in eight equal annual installments beginning July 1.

11. June 17: Cash of $7,200 was paid for rent for June, July, August and September. Put the total amount into the Prepaid Rent account.

12. June 17: Received a bill of $375 from the local newspaper for advertising.

13. June 21: Billed various miscellaneous local customers $4,900 for consulting services performed.

14. June 21: A fax machine for the office was purchased for $700 cash.

15. June 21: Accounts payable in the amount of $560 were paid.

16. June 22: Paid the advertising bill that was received on June 17.

17. June 22: Received a bill for $1,115 from Computer Parts and Repair Co. for repairs to the computer equipment.

18. June 22: Paid salaries of $910 to equipment operators for the week ending June 18.

19. June 23: Cash in the amount of $3,925 was received on billings.

20. June 23: Purchased office supplies for $505 on credit. Record the purchase as an increase to the assets.

21. June 28: Billed $5,490 to miscellaneous customers for services performed to June 25.

22. June 29: Cash in the amount of $5,201 was received for billings.

23. June 29: Paid the bill received on June 22, from Computer Parts and Repairs Co.

24. June 29: Paid salaries of $910 to equipment operators for the week ending June 25.

25. June 30: Received a bill for the amount of $790 from O & G Oil and Gas Co.

26. June 30: Paid a cash dividend of $0.17 per share to the three shareholders of Byte. [IMPORTANT NOTE: The number of shares of capital stock outstanding can be determined from the first three transactions.]

Adjusting Entries - Round to two decimal places.

27. The rent payment made on June 17 was for June, July, August and September. Expense the amount associated with one month's rent.

28. A physical inventory showed that only $202.00 worth of office supplies remained on hand as of June 30.

29. The annual interest rate on the mortgage payable was 7.75 percent. Interest expense for one-half month should be computed because the building and land were purchased and the liability incurred on June 16.

30. Information relating to the prepaid insurance may be obtained from the transaction recorded on June 14. Expense the amount associated with one half month's insurance.

31. A review of Byte’s job worksheets show that there are unbilled revenues in the amount of $5,625 for the period of June 28-30.

32. The expense for depreciation follows:

Building - $247.00

Computer Equipment - $3,052.00

Office Equipment - $27.00

33. A review of the payroll records show that unpaid salaries in the amount of $546 are owed by Byte for three days, June 28 - 30.

34. The note payable relating to the June 2, and 10 transactions is a five-year note, with interest at the rate of 12 percent annually. The June interest expense from this note is $934.33.

35. Income taxes are to be computed at the rate of 25 percent of net income before taxes.

[IMPORTANT NOTE: Since the income taxes are a percent of the net income you will want to prepare the Income Statements through the Net Income Before Tax line. The worksheet contains all of the accounts and their balances which you can then transfer to the appropriate financial statement.

Closing Entries

36. Close the revenue accounts.

37. Close the expense accounts.

38. Close the income summary account.

39. Close the dividends account.

*Chart of Accounts*

Number Name Normal Balance

1110 Cash Debit

1120 Accounts Receivable Debit

1130 Prepaid Insurance Debit

1140 Prepaid Rent Debit

1150 Office Supplies Debit

1211 Office Equip. Debit

1212 Accum. Depr.-Office Equip. Credit

1311 Computer Equip. Debit

1312 Accum. Depr.-Computer Equip. Credit

1411 Building Cost Debit

1412 Accum. Depr.-Building Credit

1510 Land Debit

2101 Accounts Payable Credit

2102 Advanced Payments Credit

2103 Interest Payable Credit

2105 Salaries Payable Credit

2106 Income Taxes Payable Credit

2201 Mortgage Payable Credit

2202 Notes Payable Credit

3100 Capital Stock Credit

3200 Retained Earnings Credit

3300 Dividends Debit

3400 Income Summary Credit

4100 Computer & Consulting Revenue Credit

5010 Rent Expense Debit

5020 Salary Expense Debit

5030 Advertising Expense Debit

5040 Repairs & Maint. Expense Debit

5050 Oil & Gas Expense Debit

5080 Supplies Expense Debit

5090 Interest Expense Debit

5100 Insurance Expense Debit

5110 Depreciation Expense Debit

5120 Income Tax Expense Debit

Answer 1