Question
At June 30, 2017, the end of its most recent fiscal year, Monty Computer Consultants post-closing trial balance was as follows: Debit Credit Cash $4,810
At June 30, 2017, the end of its most recent fiscal year, Monty Computer Consultants post-closing trial balance was as follows:
Debit | Credit | |||
---|---|---|---|---|
Cash | $4,810 | |||
Accounts receivable | 1,100 | |||
Supplies | 630 | |||
Accounts payable | $370 | |||
Unearned service revenue | 1,030 | |||
Common stock | 3,300 | |||
Retained earnings | 1,840 | |||
$6,540 | $6,540 |
The company underwent a major expansion in July. New staff was hired and more financing was obtained. Monty conducted the following transactions during July 2017, and adjusts its accounts monthly.
July | 1 | Purchased equipment, paying $3,200 cash and signing a 2-year note payable for $18,400. 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 18,400 shares of common stock for $46,000 cash. | ||
3 | Paid $3,600 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 $3,700 per month. | ||
6 | Paid $3,500 for supplies. | ||
9 | Visited client offices and agreed on the terms of a consulting project. Monty will bill the client, Connor Productions, on the 20th of each month for services performed. | ||
10 | Collected $1,100 cash on account from Milani Brothers. This client was billed in June when Monty performed the service. | ||
13 | Performed services for Fitzgerald Enterprises. This client paid $1,030 in advance last month. All services relating to this payment are now completed. | ||
14 | Paid $370 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 $11,000 cash in advance for future services to be performed. | ||
18 | Paid semi-monthly salaries for $10,100. | ||
20 | Performed services worth $25,800 on account and billed customers. | ||
20 | Received a bill for $2,000 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 $9,200 of revenue from the cash advance received July 16. | ||
27 | Received $13,800 cash from customers billed on July 20. |
Adjustment data:
1. | Adjustment of prepaid insurance. | |
2. | Adjustment of prepaid rent. | |
3. | Supplies used, $1,150. | |
4. | Equipment depreciation, $450 per month. | |
5. | Accrual of interest on note payable. | |
6. | Salaries for the second half of July, $10,100, to be paid on August 1. | |
7. | Estimated utilities expense for July, $740 (invoice will be received in August). | |
8. | Income tax for July, $1,100, will be paid in August. |
Journalize and post closing entries and complete the closing process. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. For accounts that have zero ending balance, the entry should be the balance date and zero for the amount.)
Retained Earnings July 1 Bal. 1,840 Service Revenue 1,030 July 13 July 20 25,800 July 23 9,200 July 18 Salaries and Wages Expense 10,100 10,100 July 31 Rent Expense July 31 3,700 Advertising Expense July 20 2,000 Supplies Expense 1,150 July 31 Utilities Expense July 31 740 Depreciation Expense July 31 450 Insurance Expense July 31 3001 Interest Expense July 31 92 Income Tax Expense 1,100 July 31 Income Summary Retained Earnings July 1 Bal. 1,840 Service Revenue 1,030 July 13 July 20 25,800 July 23 9,200 July 18 Salaries and Wages Expense 10,100 10,100 July 31 Rent Expense July 31 3,700 Advertising Expense July 20 2,000 Supplies Expense 1,150 July 31 Utilities Expense July 31 740 Depreciation Expense July 31 450 Insurance Expense July 31 3001 Interest Expense July 31 92 Income Tax Expense 1,100 July 31 Income SummaryStep by Step Solution
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