On June 1, 20X1, William Tsang established his own consulting firm. Selected transactions for the first few
Question:
On June 1, 20X1, William Tsang established his own consulting firm. Selected transactions for the first few days of June follow.
1. Record the transactions on page 1 of the general journal. Omit descriptions. Assume that the firm initially records prepaid expenses as assets and unearned income as a liability.
2. Record the adjusting journal entries that must be made on June 30, 20X1, on page 2 of the general journal. Omit descriptions.
Analyze:
At the end of calendar year 20X1, how much of the rent paid on June 1 will have been charged to expense?
DATE 20X1 June 1 Signed a lease for an office and issued Check 101 for $30,000 to pay the rent in advance for one year. 1 1 1 1 3 TRANSACTIONS 5 Borrowed money from Southwestern Trust Bank by issuing a three-month, 10 percent note for $18,000; received $17,550 because the bank deducted interest in advance. Signed an agreement with Michelle's Party Supplies to provide consulting services for one year at $3,250 per month; received the entire fee of $39,000 in advance. Purchased office equipment for $34,200 from Equipment Warehouse; issued a three-month, 6 percent note in payment. The equipment is estimated to have a useful life of six years and an $1,800 salvage value, and will be depreciated using the straight-line method. Purchased a one-year insurance policy and issued Check 102 for $3,360 to pay the entire premium. Purchased office furniture for $10,400 from Furniture Gallery, issued Check 103 for $5,400 and agreed to pay the balance in 60 days. The furniture is estimated to have a useful life of 10 years and an $800 salvage value, and will be depreciated using the straight-line method. Purchased office supplies for $955 with Check 104; assume $525 of supplies are on hand June 30, 20X1.
Step by Step Answer:
To determine how much of the rent paid on June 1 will have been charged to expense at the end of ca...View the full answer
College Accounting A Contemporary Approach
ISBN: 9781260780352
5th Edition
Authors: David Haddock, John Price, Michael Farina
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