Question

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.

Journalize and post adjusting entries for the month ending July 31. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Answer 1

Answer 1.
Journal Entry
Date	Particulars	Dr. Amt.	Cr. Amt.
1-Jul	Equipment	28,800.00
	Cash		4,400.00
	Notes Payable		24,400.00
	(To record the purchase of equipment)
2-Jul	Cash	61,000.00
	Common Stock		61,000.00
	(To record issue o common stock)
3-Jul	Prepaid Insurance	4,200.00
	Cash		4,200.00
	(To record the insurance paid)
3-Jul	Prepaid Rent	9,800.00
	Cash		9,800.00
	(To record the rent paid)
6-Jul	Supplies	4,600.00
	Cash		4,600.00
	(To record the supplies purchased)
9-Jul	No Entry
10-Jul	Cash	1,460.00
	Accounts Receivable		1,460.00
	(To record the cash received)
13-Jul	Unearned Service Revenue	1,370.00
	Service Revenue		1,370.00
	(To record the service revenue)
14-Jul	Accounts Payable	490.00
	Cash		490.00
	(To record the cash paid)
16-Jul	Cash	14,600.00
	Unearned Service Revenue		14,600.00
	(To record the cash recd for future services)
18-Jul	Salaries & Wages Expense	13,400.00
	Cash		13,400.00
	(To record the salaries expenses)
20-Jul	Accounts Receivable	34,200.00
	Service Revenue		34,200.00
	(To record the service revenue)
20-Jul	Advertisement Expense	2,700.00
	Accounts Payable		2,700.00
	(To record the advertisement expense)
23-Jul	Unearned Service Revenue	12,200.00
	Service Revenue		12,200.00
	(To record the service revenue)
27-Jul	Cash	18,300.00
	Accounts Receivable		18,300.00
	(To record the cash received)
31-Jul	Insurance Expense	350.00
	Prepaid Insurance		350.00
	(To record the insurance expense)
31-Jul	Rent Expense	4,900.00
	Prepaid Rent		4,900.00
	(To record the rent expense)
31-Jul	Supplies Expense	1,550.00
	Supplies		1,550.00
	(To record the supplies expense)
31-Jul	Depreciation Expense	600.00
	Accumulated Depreciation - Equipment		600.00
	(To record the depreciation expense)
31-Jul	Interest Expense	122.00
	Interest Payable		122.00
	(To record the interest expense)
31-Jul	Salaries & Wages Expense	13,400.00
	Salaries & Wages Payable		13,400.00
	(To record the salaries & wages due)
31-Jul	Utilities Expense	980.00
	Accounts Payable		980.00
	(To record the utilities expense)
31-Jul	Income Tax Expense	1,460.00
	Income Tax Payable		1,460.00
	(To record the income tax expense)

Answer 2.
Cash					Accounts Receivable					Supplies
Beg. Bal.	6,380.00	4,400.00	1-Jul		Beg. Bal.	1,460.00	1,460.00	10-Jul		Beg. Bal.	840.00	1,550.00	31-Jul
2-Jul	61,000.00	4,200.00	3-Jul		20-Jul	34,200.00	18,300.00	27-Jul		6-Jul	4,600.00
10-Jul	1,460.00	9,800.00	3-Jul
16-Jul	14,600.00	4,600.00	6-Jul
27-Jul	18,300.00	490.00	14-Jul
		13,400.00	18-Jul
End. Bal.	64,850.00				End. Bal.	15,900.00				End. Bal.	3,890.00
Prepaid Insurance					Prepaid Rent					Equipment
Beg. Bal.	-	350.00	31-Jul		Beg. Bal.	-	4,900.00	31-Jul		Beg. Bal.	-
3-Jul	4,200.00				3-Jul	9,800.00				1-Jul	28,800.00
End. Bal.	3,850.00				End. Bal.	4,900.00				End. Bal.	28,800.00
Accumulated Depreciation - Equipment					Accounts Payable					Notes Payable
Beg. Bal.		-			Beg. Bal.		490.00			Beg. Bal.		-
		600.00	31-Jul		14-Jul	490.00	2,700.00	20-Jul				24,400.00	1-Jul
							980.00	31-Jul
End. Bal.		600.00			End. Bal.		3,680.00			End. Bal.		24,400.00
Interest Payable					Income Tax Payable					Salaries & Wages Payable
Beg. Bal.		-			Beg. Bal.	-	1,460.00	31-Jul		Beg. Bal.		-
		122.00	31-Jul									13,400.00	31-Jul
End. Bal.		122.00			End. Bal.		1,460.00			End. Bal.		13,400.00
Unearned Service Revenue					Common Stock					Retained Earnings
Beg. Bal.		1,370.00			Beg. Bal.		4,400.00			Beg. Bal.		2,420.00
13-Jul	1,370.00	14,600.00	16-Jul				61,000.00	2-Jul
23-Jul	12,200.00
End. Bal.		2,400.00			End. Bal.		65,400.00			End. Bal.		2,420.00
Dividends					Service Revenue					Supplies Expense
Beg. Bal.	-						1,370.00	13-Jul		31-Jul	1,550.00
							34,200.00	20-Jul
							12,200.00	23-Jul
End. Bal.		-			End. Bal.		47,770.00			End. Bal.	1,550.00
Depreciation Expense					Insurance Expense					Salaries & Wages Expense
Beg. Bal.	-				Beg. Bal.	-				Beg. Bal.	-
31-Jul	600.00				31-Jul	350.00				18-Jul	13,400.00
										31-Jul	13,400.00
End. Bal.	600.00				End. Bal.	350.00				End. Bal.	26,800.00
Advertisement Expense					Income Tax Expense					Interest Expense
Beg. Bal.	-				Beg. Bal.	-				Beg. Bal.	-
20-Jul	2,700.00				31-Jul	1,460.00				31-Jul	122.00
End. Bal.	2,700.00				End. Bal.	1,460.00				End. Bal.	122.00
Rent Expense					Utilities Expense
Beg. Bal.	-				Beg. Bal.	-
31-Jul	4,900.00				31-Jul	980.00
End. Bal.	4,900.00				End. Bal.	980.00