Question

On July 1, 2019, Tim Stein established his own accounting practice. Selected transactions for the first few days of July follow.

DATE		TRANSACTIONS
July	1	Signed a lease for an office and issued Check 101 for $14,550 to pay the rent in advance for six months.
	1	Borrowed money from Second National Bank by issuing a four-month, 12 percent note for $35,200; received $33,792 because the bank deducted the interest in advance.
	1	Signed an agreement with Carter Corp. to provide accounting and tax services for one year at $6,900 per month; received the entire fee of $82,800 in advance.
	1	Purchased office equipment for $19,200 from Office Outfitters; issued a two-month, 6 percent note in payment. The equipment is estimated to have a useful life of six years and a $3,360 salvage value. The equipment will be depreciated using the straight-line method.
	1	Purchased a one-year insurance policy and issued Check 102 for $1,728 to pay the entire premium.
	3	Purchased office furniture for $19,300 from Furniture Warehouse; issued Check 103 for $12,400 and agreed to pay the balance in 60 days. The equipment has an estimated useful life of five years and a $1,000 salvage value. The office furniture will be depreciated using the straight-line method.
	5	Purchased office supplies for $1,990 with Check 104. Assume $890 of supplies are on hand July 31, 2019.

Required:

Record the transactions in the general journal. Assume that the firm initially records prepaid expenses as assets and unearned income as a liability for the year 2019.

Record the adjusting journal entries that must be made on July 31, 2019.

Analyze:
What balance should be reflected in Unearned Accounting Fees at July 31, 2019?

Record the transactions in the general journal. Assume that the firm initially records prepaid expenses as assets and unearned income as a liability for the year 2019.

create a Journal entry worksheet Jul 1 for the following:

Record the payment of rent.

Record the borrowing.

Record the fees received in advance.

Record the purchase of equipment.

Record the payment for insurance.

Record the purchase of furniture.

Record the purchase of supplies.

Record the adjusting journal entries that must be made on July 31, 2019.

create a Journal entry worksheet Jul 31 with the following:

Record the adjustment for interest paid in advance.

Record the adjustment for accounting fees earned.

Record the adjustment for interest on the note payable.

Record the adjustment for depreciation on the equipment.

Record the adjustment for insurance expired.

Record the adjustment for depreciation on the furniture.

Record the adjustment for supplies.

What balance should be reflected in Unearned Accounting Fees at July 31, 2019?

Unearned accounting fees, July 31, 2019? ?????

Answer 1

	JOURNAL ENTRY
	Date	Account Title	Debit	Credit
	July 1, 2019	Prepaid rent	$14,550
		Cash		$14,550
	July 1, 2019	Cash	$33,792
		Prepaid interest		$1,408	(35200-33792)
		Note payable		$35,200
	July 1, 2019	Cash	$82,800
		Unearned Income		$82,800
	July 1, 2019	Office equipment	$19,200
		Note Payable		$19,200
	July 1, 2019	Prepaid Insurance	$1,728
		Cash		$1,728
	July 3, 2019	Office Furniture	$19,300
		Cash		$12,400
		Accounts payable		$6,900	(19300-12400)
	July 5, 2019	Office Supplies	$1,990
		Cash		$1,990
		AGJUSTING ENTRIES
	July 31, 2019	Rent expense	$2,425		(14550/6)
		Prepaid rent		$2,425
	July 31, 2019	Interest expense	$352.00		(35200*0.12)/12
		Prepaid interest		$352.00
	July 31, 2019	Unearned Income	$6,900
		Service revenue		$6,900
	July 31, 2019	Depreciation expense	$        220		((19200-3360)/6)*(1/12)
		Accumulated depreciation-Office equipment		$        220
	July 31, 2019	Insurance expense	$144
		Prepaid insurance		$144	(1728/12)
	July 31, 2019	Depreciation expense	$        305		((19300-1000)/5)*(1/12)
		Accumulated depreciation-Office Furniture		$        305
	July 31, 2019	Supplies expense	$1,100		(1990-890)
		Supplies		$1,100
		Balance Unearned Income on July 31	$75,900	(82800-6900)