Question
Description of transaction June 1: Hudson Bloom invested $143,900.00 cash and computer equipment with a fair market value of $39,000.00 in his new business, Byte
Description of transaction
June 1: Hudson Bloom invested $143,900.00 cash and computer equipment with a fair market value of $39,000.00 in his new business, Byte of Accounting.
June 1: Check # 5000 was used to purchased office equipment costing $650.00 from Office Express. The invoice number was 87417.
June 1: Check # 5001 was used to purchased computer equipment costing $11,500.00 from Lauren Roberts. The invoice number was 20117.
June 2: Check # 5002 was used to make a down payment of $31,000.00 on additional computer equipment that was purchased from Royce Computers, invoice number 76542. The full price of the computer was $155,000.00. A five-year note was executed by Byte for the balance.
June 4: Additional office equipment costing $300.00 was purchased on credit from Discount Computer Corporation. The invoice number was 98432.
June 8: Unsatisfactory office equipment costing $60.00 from invoice number 98432 was returned to Discount Computer for credit to be applied against the outstanding balance owed by Byte.
June 10: Check # 5003 was used to make a $23,750.00 payment reducing the principal owed on the June 2 purchase of computer equipment from Royce Computers.
June 14: Check # 5004 was used to purchase a one-year insurance policy covering its computer equipment for $5,472.00 from Seth's Insurance. The effective date of the policy was June 16 and the invoice number was 2387.
June 16: A check in the amount of $6,500.00 was received for services performed for Pitman Pictures.
June 16: Byte purchased a building and the land it is on for $125,000.00 to house its repair facilities and to store computer equipment. The lot on which the building is located is valued at $20,000.00. The balance of the cost is to be allocated to the building. Check # 5005 was used to make the down payment of $12,500.00. A thirty-year mortgage with an initial payment due on August 1st was established for the balance.
June 17: Check # 5006 for $3,800.00 was paid for rent for June and July.
June 17: Received invoice number 26354 in the amount of $250.00 from the local newspaper for advertising.
June 21: Billed various miscellaneous local customers $4,800.00 for consulting services performed.
June 21: Check # 5008 was used to purchase a fax machine for the office from Office Machines Express for $775.00. The invoice number was 975-328.
June 21: Accounts payable in the amount of $240.00 were paid with Check # 5007.
June 22: Check # 5010 was used to pay the advertising bill that was received on June 17.
June 22: Received a bill for $1,265.00 from Computer Parts and Repair Co. for repairs to the computer equipment. The invoice number was 43254.
June 22: Check # 5009 was used to pay salaries of $860.00 to equipment operators for the week ending June 18. Ignore payroll taxes.
June 23: Cash in the amount of $3,845.00 was received on billings.
June 23: Purchased office supplies for $605.00 from Staples on the account. The invoice number was 65498.
June 28: Billed $5,595.00 to miscellaneous customers for services performed to June 25.
June 29: Cash in the amount of $5,300.00 was received for billings.
June 29: Paid the bill received on June 22, from Computer Parts and Repairs Co with Check # 5011.
June 29: Check # 5012 was used to pay salaries of $860.00 to equipment operators for the week ending June 25. Ignore payroll taxes. June 30: Received a bill for the amount of $940.00 from O & G Oil and Gas Co. The invoice number was 784537.
June 30: Check # 5013 was used to pay for airline tickets of $1,800.00 to send the kids to Grandma Ellen for the July 4th holiday.
Adjusting Entries - Round to two decimal places.
The rent payment made on June 17 was for June and July. Expense the amount associated with one month's rent.
A physical inventory showed that only $247.00 worth of office supplies remained on hand as of June 30.
The annual interest rate on the mortgage payable was 9.00 percent. Interest expense for a one-half month should be computed because the building and land were purchased and the liability incurred on June 16.
Record a journal entry to reflect that one-half month's insurance has expired.
A review of Bytes job worksheets shows that there are unbilled revenues in the amount of $9,000 for the period of June 28-30.
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 buildings scrap value is $8,000. The office equipment has a scrap value of $450. The computer equipment has no scrap value. Calculate the depreciation for one month.
A review of the payroll records shows that unpaid salaries in the amount of $516.00 are owed by Byte for three days, June 28 - 30. Ignore payroll taxes. The note payable to Royce Computers (transactions 04 and 07) is a five-year note, with interest at the rate of 12 percent annually. Interest expense should be computed based on a 360 day year. [IMPORTANT NOTE: The original note on the computer equipment purchased on June 2 was $124,000.00. On June 10, eight days later, $23,750.00 was repaid. Interest expense must be calculated on the $124,000.00 for eight days. In addition, interest expense on the $100,250.00 balance of the loan ($124,000.00 less $23,750.00 = $100,250.00) must be calculated for the 20 days remaining in the month of June.]
Closing Entries Close the revenue accounts.
Close the expense accounts.
Close the income summary account.
Close the withdrawal account.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
International Accounting
Authors: Shirine Rathore
2nd Edition
8120336739, 9788120336735
