Classic Readers Nook is located in a small town in rural Saskatchewan. The store focuses on selling books and giftware; as well as providing coffee services to its customers. In early July 2020, the stores bookkeeper quit and the owner, Sonya Bosko, has asked you to assist with some of the transactions for July as well as any adjusting journal entries that are needed as of July 31. Below is the balance sheet as of last month.

Classic Readers Nook Balance Sheet at June 30, 2020
Assets:		Liabilities:
Cash	$ 5,800	Accounts Payable	$ 3,800
Accounts Receivable	4,300	Employee Deductions Payable	1,900
Supplies	700	Note Payable, 2 years, 4%	25,000
Inventory	13,200
Prepaid Rent	9,000	Shareholders Equity:
Coffee Equipment	6,000	Contributed Capital	2,000
Accumulated Depreciation	( 2,300 )	Retained Earnings	4,000
Total Assets	$36,700	Total Liabilities and Shareholders Equity	$36,700

The store has two full time employees at a net monthly salary of $2,500 each after withholdings for CPP ($145), EI ($150), and Income Tax ($300). The following transactions occurred during July of the current year.

Required:

In the space following each of the July transactions listed on the following pages, prepare journal entries in proper form.

July 1. CRN purchased for cash, a new expresso machine costing $7,200 including taxes. [1]

July 2 $1,900 is remitted (paid) to the government for Junes employee deductions payable. [1]

July 5. $3,400 of accounts receivable arising from last months June sales are collected. [1]

July 7. Additional coffee supplies costing $1,300 are purchased on account and received. [1]

July 8. $1,800 of accounts payable from June of last month are paid. [1]

July 9. Purchased and received $4,500 of merchandise for resale from the wholesaler with terms 2/10, net 30. [1]

July 10 Contacted the supplier to complain that two cases of books had been slightly damaged during shipment. The supplier granted CRN a $900 allowance on the

product. [1]

July 15. Recorded $8,000 of sales for the first half of the month of which 20% were on account. The cost to CRN for the items sold was $5,200 [2]

July 16. Salaries are paid for the first half of the month at a total of $2,500 net. [2]

July 17 CRN pays its supplier the full amount for the purchase made on July 9. [1]

July 29. Paid Clearlite Glass Ltd. $1,700 to repair the store front window that was damaged during a summer hail storm. [1]

July 31a. Received an invoice in the amount of $600 for July phone and internet usage. Payment is due August 15. [1]

July 31b. Coffee supplies on hand are determined to be $600 after a count on July 31. [1]

July 31c. The old coffee equipment is sold for $2,500. The store purchased the coffee equipment three years ago and paid $6,000. At the time, the equipment was deemed to have a 5-year useful life and a $1,500 salvage value. It has been depreciated at $900/year. Depreciation has been recorded up to June 30, 2020. (Hint: you will need to update the depreciation before recording the sale). [1]

July 31d. Accrue one month of interest on the bank loan. [1]

July 31e. Assume the new coffee machine purchased on July 1 will be used for six years, after which it will have no value. Record depreciation for the month of July using the straight-line method. [1]

July 31f. Salaries earned by employees for the period from July 1631 are $1,547.50 per employee and will be paid on August 1. [2]

July 31g. Adjust the prepaid rent account. The amount at the end of June represents rent that covers CRN from July 1 to December 31, 2020. [1]

July 31h. The month end review of inventory stock resulted in the discovery of 50 outdated book titles. The inventory cost of these titles are $1500, but CRN estimates that they will sell for $400. Record the adjustment based on the lower of cost and net realizable value. [1]