In: Accounting
At June 30, 2017, the end of its most recent fiscal year, Blue
Computer Consultants’ post-closing trial balance was as
follows:
Debit | Credit | |||
---|---|---|---|---|
Cash | $6,380 | |||
Accounts receivable | 1,460 | |||
Supplies | 840 | |||
Accounts payable | $490 | |||
Unearned service revenue | 1,370 | |||
Common stock | 4,400 | |||
Retained earnings | 2,420 | |||
$8,680 | $8,680 |
The company underwent a major expansion in July. New staff was
hired and more financing was obtained. Blue conducted the following
transactions during July 2017, and adjusts its accounts
monthly.
July | 1 | Purchased equipment, paying $4,400 cash and signing a 2-year note payable for $24,400. The equipment has a 4-year useful life. The note has a 6% interest rate which is payable on the first day of each following month. | |
2 | Issued 24,400 shares of common stock for $61,000 cash. | ||
3 | Paid $4,200 cash for a 12-month insurance policy effective July 1. | ||
3 | Paid the first 2 (July and August 2017) months’ rent for an annual lease of office space for $4,900 per month. | ||
6 | Paid $4,600 for supplies. | ||
9 | Visited client offices and agreed on the terms of a consulting project. Blue will bill the client, Connor Productions, on the 20th of each month for services performed. | ||
10 | Collected $1,460 cash on account from Milani Brothers. This client was billed in June when Blue performed the service. | ||
13 | Performed services for Fitzgerald Enterprises. This client paid $1,370 in advance last month. All services relating to this payment are now completed. | ||
14 | Paid $490 cash for a utility bill. This related to June utilities that were accrued at the end of June. | ||
16 | Met with a new client, Thunder Bay Technologies. Received $14,600 cash in advance for future services to be performed. | ||
18 | Paid semi-monthly salaries for $13,400. | ||
20 | Performed services worth $34,200 on account and billed customers. | ||
20 | Received a bill for $2,700 for advertising services received during July. The amount is not due until August 15. | ||
23 | Performed the first phase of the project for Thunder Bay Technologies. Recognized $12,200 of revenue from the cash advance received July 16. | ||
27 | Received $18,300 cash from customers billed on July 20. |
Adjustment data:
1. | Adjustment of prepaid insurance. | |
2. | Adjustment of prepaid rent. | |
3. | Supplies used, $1,550. | |
4. | Equipment depreciation, $600 per month. | |
5. | Accrual of interest on note payable. | |
6. | Salaries for the second half of July, $13,400, to be paid on August 1. | |
7. | Estimated utilities expense for July, $980 (invoice will be received in August). | |
8. | Income tax for July, $1,460, will be paid in August. |
The chart of accounts for Blue Computer Consultants contains the
following accounts: Cash, Accounts Receivable, Supplies, Prepaid
Insurance. Prepaid Rent, Equipment, Accumulated
Depreciation—Equipment, Accounts Payable, Notes Payable, Interest
Payable, Income Taxes Payable, Salaries and Wages Payable, Unearned
Service Revenue, Common Stock, Retained Earnings, Dividends, Income
Summary, Service Revenue, Supplies Expense, Depreciation Expense,
Insurance Expense, Salaries and Wages Expense, Advertising Expense,
Income Tax Expense, Interest Expense, Rent Expense, Supplies
Expense, and Utilities Expense.
Prepare an adjusted trial balance.
Opening Balance | Transactions | Adjustments | Balance as on 31st July | |||||||||||||
Debit | Credit | Date | Debit | Credit | Date | Debit | Credit | Account | Debi | Credit | ||||||
Cash | $6,380 | July | 1 | $4,400 | Cash | $64,850 | ||||||||||
Cash | July | 2 | $61,000 | Accounts Receivable | $15,900 | |||||||||||
Cash | July | 3 | $4,200 | Supplies | $3,890 | |||||||||||
Cash | July | 3 | $9,800 | Accounts Payable | $3,680 | |||||||||||
Cash | July | 6 | $4,600 | Unearned Service Revenue | $2,400 | |||||||||||
Cash | July | 10 | $1,460 | Common stock | $65,400 | |||||||||||
Cash | July | 14 | $490 | Retained earning(beginning) | $2,420 | |||||||||||
Cash | July | 16 | $14,600 | Notes payable | $24,400 | |||||||||||
Cash | July | 18 | $13,400 | Equipment | $28,800 | |||||||||||
Cash | July | 27 | $18,300 | Prepaid Insurance | $3,850 | |||||||||||
Accoints Receivable | $1,460 | July | 10 | $1,460 | Prepaid Rent | $4,900 | ||||||||||
Accoints Receivable | July | 20 | $34,200 | Sevice Revenue | $47,770 | |||||||||||
Accoints Receivable | July | 27 | $18,300 | Salaries and Wages expense | $26,800 | |||||||||||
Supplies | $840 | July | 6 | $4,600 | July | 31 | $1,550 | Salaries and Wages Payable | $13,400 | |||||||
Accounts payable | $490 | July | 14 | $490 | Advertising expense | $2,700 | ||||||||||
Accounts payable | July | 20 | $2,700 | July | 31 | $980 | Insurance expense | $350 | ||||||||
Unearned Service revenue | $1,370 | July | 13 | $1,370 | Rent Expense | $4,900 | ||||||||||
Unearned Service revenue | July | 16 | $14,600 | Supplies Expense | $1,550 | |||||||||||
Unearned Service revenue | July | 23 | $12,200 | Depreciation expense | $600 | |||||||||||
Common stock | $4,400 | July | 2 | $61,000 | Accumulated depreciation | $600 | ||||||||||
Retained earning | $2,420 | Interest expense | $ 122 | |||||||||||||
$8,680 | $8,680 | Interest payable | $ 122 | |||||||||||||
Notes payable | July | 1 | $24,400 | Utilities expense | $980 | |||||||||||
Equipment | July | 1 | $28,800 | (24400+4400) | Income tax expense | $1,460 | ||||||||||
Prepaid Insurance | July | 3 | $4,200 | July | 31 | $350 | Income tax payable | $1,460 | ||||||||
Prepaid Rent | July | 3 | $9,800 | July | 31 | $4,900 | Total | $161,652 | $161,652 | |||||||
Sevice Revenue | July | 13 | $1,370 | |||||||||||||
Sevice Revenue | July | 20 | $34,200 | |||||||||||||
Sevice Revenue | July | 23 | $12,200 | |||||||||||||
Salaries and Wages expense | July | 18 | $13,400 | July | 31 | $13,400 | ||||||||||
Salaries and Wages Payable | July | 31 | $13,400 | |||||||||||||
Advertising expense | July | 20 | $2,700 | |||||||||||||
Insurance expense | July | 31 | $350 | (4200/12) | ||||||||||||
Rent Expense | July | 31 | $4,900 | |||||||||||||
Supplies Expense | July | 31 | $1,550 | |||||||||||||
Depreciation expense | July | 31 | $600 | |||||||||||||
Accumulated depreciation | July | 31 | $600 | |||||||||||||
Interest expense | July | 31 | $ 122 | (24400*0.06)/12 | ||||||||||||
Interest payable | July | 31 | $ 122 | |||||||||||||
Utilities expense | July | 31 | $980 | |||||||||||||
Income tax expense | July | 31 | $1,460 | |||||||||||||
Income tax payable | July | 31 | $1,460 | |||||||||||||
Adjusted Trial Balance | ||||||||||||||||
ACCOUNT | DEBIT | CREDIT | ||||||||||||||
Cash | $64,850 | |||||||||||||||
Accounts Receivable | $15,900 | |||||||||||||||
Supplies | $3,890 | |||||||||||||||
Accounts Payable | $ 3,680 | |||||||||||||||
Unearned Service Revenue | $ 2,400 | |||||||||||||||
Common stock | $ 65,400 | |||||||||||||||
Retained earning(beginning) | $ 2,420 | |||||||||||||||
Notes payable | $ 24,400 | |||||||||||||||
Equipment | $28,800 | |||||||||||||||
Prepaid Insurance | $3,850 | |||||||||||||||
Prepaid Rent | $4,900 | |||||||||||||||
Sevice Revenue | $ 47,770 | |||||||||||||||
Salaries and Wages expense | $26,800 | |||||||||||||||
Salaries and Wages Payable | $ 13,400 | |||||||||||||||
Advertising expense | $2,700 | |||||||||||||||
Insurance expense | $350 | |||||||||||||||
Rent Expense | $4,900 | |||||||||||||||
Supplies Expense | $1,550 | |||||||||||||||
Depreciation expense | $600 | |||||||||||||||
Accumulated depreciation | $ 600 | |||||||||||||||
Interest expense | $122 | |||||||||||||||
Interest payable | $ 122 | |||||||||||||||
Utilities expense | $980 | |||||||||||||||
Income tax expense | $1,460 | |||||||||||||||
Income tax payable | $ 1,460 | |||||||||||||||
Total | $161,652 | $161,652 | ||||||||||||||