Question
At June 30, 2017, the end of its most recent fiscal year, Bramble Computer Consultants post-closing trial balance was as follows: Debit . Credit Cash
At June 30, 2017, the end of its most recent fiscal year, Bramble Computer Consultants post-closing trial balance was as follows:
Debit . Credit
Cash . $6,490
Accounts receivable . 1,490
Supplies . 860
Accounts payable $500
Unearned service revenue 1,390
Common stock 4,500
Retained earnings 2,450
$8,840 $8,840
The company underwent a major expansion in July. New staff was hired and more financing was obtained. Bramble conducted the following transactions during July 2017, and adjusts its accounts monthly.
July | 1 | Purchased equipment, paying $5,200 cash and signing a 2-year note payable for $24,800. 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 24,800 shares of common stock for $62,000 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 $5,000 per month. | ||
6 | Paid $4,700 for supplies. | ||
9 | Visited client offices and agreed on the terms of a consulting project. Bramble will bill the client, Connor Productions, on the 20th of each month for services performed. | ||
10 | Collected $1,490 cash on account from Milani Brothers. This client was billed in June when Bramble performed the service. | ||
13 | Performed services for Fitzgerald Enterprises. This client paid $1,390 in advance last month. All services relating to this payment are now completed. | ||
14 | Paid $500 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 $14,900 cash in advance for future services to be performed. | ||
18 | Paid semi-monthly salaries for $13,600. | ||
20 | Performed services worth $34,700 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 $12,400 of revenue from the cash advance received July 16. | ||
27 | Received $18,600 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, $625 per month. | |
5. | Accrual of interest on note payable. | |
6. | Salaries for the second half of July, $13,600, to be paid on August 1. | |
7. | Estimated utilities expense for July, $990 (invoice will be received in August). | |
8. | Income tax for July, $1,490, will be paid in August. |
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