1 Byte of Accounting, Inc. Tamia Carnell 1760 2 3 Transaction Description of transaction 4 01. June 1: Byte of Accounting, Inc. acquired $42,000 in cash from Lauryn and issued 2,000 shares of its common stock. 5 6 02. June 1: Byte of Accounting, Inc. issued 2,540 shares of its common stock to Tamia Carnell after $22,050 in cash and computer equipment with a fair market value of $31,290 were received. 7 8 03. 9 June 1: Byte of Accounting, Inc. issued 2,022 shares of its common stock after acquiring from Courtney $30,450 in cash, computer equipment with a fair market value of $11,340 and office equipment with a fair value of $672. June 2! A down payment of $30,000 in cash was made on additional computer equipment that was purchased for $150,000. A five-year note was executed by Byte for the balance 10 04. 11 12 05. June 4: Additional office equipment costing $500 was purchased on credit from Discount Computer Corporation. 13 14 06. June 8: Unsatisfactory office equipment costing $100 was returned to Discount Computer for credit to be applied against the outstanding balance owed by Byte. 15 16 07 June 10: Byte paid $23,000 on the balance it owed on the June 2 purchase of computer equipment 17 18 08. 10 June 14. A one-year insurance policy covering its computer equipment was purchased by Ruta for $4 068 in cash The effective date of the nolic was Tune 16 Transactions General Inrnal Workchout 18 08. June 14: A one-year insurance policy covering its computer equipment was purchased by Byte for $4,968 in cash. The effective date of the policy was June 16. 19 20 09. June 16: A check in the amount of $8,250 was received for consulting revenue. 21 22 10. June 16: Byte purchased a building and the land it is on for $143,000, to house its repair facilities and to store computer equipment. The lot on which the building is located is valued at $23,000. The balance of the cost is to be allocated to the building. Byte made a cash down payment of $14,300 and executed a mortgage for the balance. The mortgage is payable in eight equal annual installments beginning July 1. 3 -4 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. 5 6 7 8 9 12. June 17: Received a bill of $450 from the local newspaper for advertising 13. June 21: Accounts payable in the amount of $400 were paid. 0 1 14. June 21: A fax machine for the office was purchased for $875 cash. 2 15. June 21: Billed various miscellaneous local customers $4,800 for consulting services performed 4 16. June 22: Paid salaries of $910 to equipment operators for the week ending June 18. s B 17 June 22, Received a bill for $1,090 from Computer Parts and Repair Co. for repairs to the computer equipment. 18 Tue 7: Paid the advertising hill that we received an Tuna 17 38 39 18. June 22: Paid the advertising bill that was received on June 17. 40 19. June 23: Purchased office supplies for $555 on credit. Record the purchase as an increase to the assets. 41 42 43 20. June 23: Cash in the amount of $3,845 was received on billings. 44 45 21. June 28: Billed $6,015 to miscellaneous customers for services performed to June 25. 46 22. June 29: Paid the bill received on June 22, from Computer Parts and Repairs Co. 47 48 49 23. June 29: Cash in the amount of $5,699 was received for billings. 50 51 24. June 29: Paid salaries of $910 to equipment operators for the week ending June 25. 52 53 25. June 30. Received a bill for the amount of $965 from O & G Oil and Gas Co. 54 26. June 30: Paid a cash dividend of $0.22 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. ] 55 56 57 58 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. 59 60 28. A physical inventory showed that only $225.00 worth of office supplies remained on hand as of June 30. 61 62 62 29. The annual interest rate on the mortgage payable was 8.25 percent. Interest expense for one-half month should be computed because the building and land were purchased and the liability incurred on June 16. 63 64 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. 65 66 31. A review of Byte's job worksheets show that there are unbilled revenues in the amount of $5,750 for the period of June 28-30. 67 68 69 32. 70 71 72 The fixed assets have estimated useful lives as follows: Building - 31.5 years Computer Equipment - 5.0 years Office Equipment - 7.0 years Use the straight-line method of depreciation. Management has decided that assets purchased during a month are treated as if purchased on the first day of the month. The building's scrap value is $8,500. The office equipment has a scrap value of $300. The computer equipment has no scrap value. Calculate the depreciation for one month. 73 74 33. A review of the payroll records show that unpaid salaries in the amount of $546.00 are owed by Byte for three days, June 28 - 30. 75 76 34. 77 78 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. Interest expense should be computed based (IMPORTANT NOTE: The original note on the computer equipment purchased on June 2 was $120,000. On June 10, eight days later, $23,000 was repaid. Interest expense calculated on the $120,000 for eight days. In addition, interest expense on the $97.000 balance of the loan ($120,000 less $23,000 - $97.000) must be calculated for the 20 days remaining in the month of June. 79 A Byte of Accounting, Inc. Income Statement For Month Ending June 30, 2021 Revenues Computer & Consulting Revenue Expenses Rent Expense Salary Expense Advertising Expense Repairs & Maint. Expense Oil & Gas Expense Supplies Expense Interest Expense Insurance Expense Depreciation Expense Total Expenses Net Income Before Tax Income Tax Expense (Roud to two decimal places) Net Income After Tax A E B D A Byte of Accounting, Inc. Statement of Changes in Retained Earnings For Month Ending June 30, 2021 Total Balance Beginning of Period Net Income Dividends Balance, End of Period A Byte of Accounting, Inc. Balance Sheet As of June 30, 2021 Assets Current Assets Cash Accounts Receivable Prepaid Insurance Prepaid Rent Office Supplies Total Long-Term Assets Office Equip Accum. Depr.-Office Equip. Computer Equip Accum. Depr.-Computer Equip. Building Cost Accum. Depr -Building Land Total Total Assets Liabilities G Land Total Total Assets Liabilities Current Liabilities Accounts Payable Advanced Payment Interest Payable Salaries Payable Income Taxes Payable Total Long-Term Liabilities Mortgage Payable Notes Payable Total Total Liabilities Stockholder's Equity Capital Stock Retained Earnings Total Total Liabilities and Stockholder's Equity 1 Byte of Accounting, Inc. Tamia Carnell 1760 2 3 Transaction Description of transaction 4 01. June 1: Byte of Accounting, Inc. acquired $42,000 in cash from Lauryn and issued 2,000 shares of its common stock. 5 6 02. June 1: Byte of Accounting, Inc. issued 2,540 shares of its common stock to Tamia Carnell after $22,050 in cash and computer equipment with a fair market value of $31,290 were received. 7 8 03. 9 June 1: Byte of Accounting, Inc. issued 2,022 shares of its common stock after acquiring from Courtney $30,450 in cash, computer equipment with a fair market value of $11,340 and office equipment with a fair value of $672. June 2! A down payment of $30,000 in cash was made on additional computer equipment that was purchased for $150,000. A five-year note was executed by Byte for the balance 10 04. 11 12 05. June 4: Additional office equipment costing $500 was purchased on credit from Discount Computer Corporation. 13 14 06. June 8: Unsatisfactory office equipment costing $100 was returned to Discount Computer for credit to be applied against the outstanding balance owed by Byte. 15 16 07 June 10: Byte paid $23,000 on the balance it owed on the June 2 purchase of computer equipment 17 18 08. 10 June 14. A one-year insurance policy covering its computer equipment was purchased by Ruta for $4 068 in cash The effective date of the nolic was Tune 16 Transactions General Inrnal Workchout 18 08. June 14: A one-year insurance policy covering its computer equipment was purchased by Byte for $4,968 in cash. The effective date of the policy was June 16. 19 20 09. June 16: A check in the amount of $8,250 was received for consulting revenue. 21 22 10. June 16: Byte purchased a building and the land it is on for $143,000, to house its repair facilities and to store computer equipment. The lot on which the building is located is valued at $23,000. The balance of the cost is to be allocated to the building. Byte made a cash down payment of $14,300 and executed a mortgage for the balance. The mortgage is payable in eight equal annual installments beginning July 1. 3 -4 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. 5 6 7 8 9 12. June 17: Received a bill of $450 from the local newspaper for advertising 13. June 21: Accounts payable in the amount of $400 were paid. 0 1 14. June 21: A fax machine for the office was purchased for $875 cash. 2 15. June 21: Billed various miscellaneous local customers $4,800 for consulting services performed 4 16. June 22: Paid salaries of $910 to equipment operators for the week ending June 18. s B 17 June 22, Received a bill for $1,090 from Computer Parts and Repair Co. for repairs to the computer equipment. 18 Tue 7: Paid the advertising hill that we received an Tuna 17 38 39 18. June 22: Paid the advertising bill that was received on June 17. 40 19. June 23: Purchased office supplies for $555 on credit. Record the purchase as an increase to the assets. 41 42 43 20. June 23: Cash in the amount of $3,845 was received on billings. 44 45 21. June 28: Billed $6,015 to miscellaneous customers for services performed to June 25. 46 22. June 29: Paid the bill received on June 22, from Computer Parts and Repairs Co. 47 48 49 23. June 29: Cash in the amount of $5,699 was received for billings. 50 51 24. June 29: Paid salaries of $910 to equipment operators for the week ending June 25. 52 53 25. June 30. Received a bill for the amount of $965 from O & G Oil and Gas Co. 54 26. June 30: Paid a cash dividend of $0.22 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. ] 55 56 57 58 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. 59 60 28. A physical inventory showed that only $225.00 worth of office supplies remained on hand as of June 30. 61 62 62 29. The annual interest rate on the mortgage payable was 8.25 percent. Interest expense for one-half month should be computed because the building and land were purchased and the liability incurred on June 16. 63 64 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. 65 66 31. A review of Byte's job worksheets show that there are unbilled revenues in the amount of $5,750 for the period of June 28-30. 67 68 69 32. 70 71 72 The fixed assets have estimated useful lives as follows: Building - 31.5 years Computer Equipment - 5.0 years Office Equipment - 7.0 years Use the straight-line method of depreciation. Management has decided that assets purchased during a month are treated as if purchased on the first day of the month. The building's scrap value is $8,500. The office equipment has a scrap value of $300. The computer equipment has no scrap value. Calculate the depreciation for one month. 73 74 33. A review of the payroll records show that unpaid salaries in the amount of $546.00 are owed by Byte for three days, June 28 - 30. 75 76 34. 77 78 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. Interest expense should be computed based (IMPORTANT NOTE: The original note on the computer equipment purchased on June 2 was $120,000. On June 10, eight days later, $23,000 was repaid. Interest expense calculated on the $120,000 for eight days. In addition, interest expense on the $97.000 balance of the loan ($120,000 less $23,000 - $97.000) must be calculated for the 20 days remaining in the month of June. 79 A Byte of Accounting, Inc. Income Statement For Month Ending June 30, 2021 Revenues Computer & Consulting Revenue Expenses Rent Expense Salary Expense Advertising Expense Repairs & Maint. Expense Oil & Gas Expense Supplies Expense Interest Expense Insurance Expense Depreciation Expense Total Expenses Net Income Before Tax Income Tax Expense (Roud to two decimal places) Net Income After Tax A E B D A Byte of Accounting, Inc. Statement of Changes in Retained Earnings For Month Ending June 30, 2021 Total Balance Beginning of Period Net Income Dividends Balance, End of Period A Byte of Accounting, Inc. Balance Sheet As of June 30, 2021 Assets Current Assets Cash Accounts Receivable Prepaid Insurance Prepaid Rent Office Supplies Total Long-Term Assets Office Equip Accum. Depr.-Office Equip. Computer Equip Accum. Depr.-Computer Equip. Building Cost Accum. Depr -Building Land Total Total Assets Liabilities G Land Total Total Assets Liabilities Current Liabilities Accounts Payable Advanced Payment Interest Payable Salaries Payable Income Taxes Payable Total Long-Term Liabilities Mortgage Payable Notes Payable Total Total Liabilities Stockholder's Equity Capital Stock Retained Earnings Total Total Liabilities and Stockholder's Equity