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Transaction Byte of Accounting, Inc. Prashant Patel 2873 Description of transaction June 1: Byte of Accounting, Inc. issued 2,560 shares of its common stock to Jeremy after $22.660 in cash and computer equipment with a fair market value of $33,660 were received. 01. 02. June 1: Byte of Accounting, Inc. issued 1,900 shares of its common stock after acquiring from Courtney $29.700 in cash, computer equipment with a fair market value of $11,000 and office equipment with a fair value of $1,100. 03. June 1: Byte of Accounting, Inc. acquired $79,200 in cash from Prashant Patel and issued 3,600 shares of its common stock. 04. June 2: A down payment of $29.000 in cash was made on additional computer equipment that was purchased for $145,000. A five-year note was executed by Byte for the balance. 05. June 4: Additional office equipment costing $700 was purchased on credit from Discount Computer Corporation 06. June 8: Unsatisfactory office equipment costing $140 was returned to Discount Computer for credit to be applied against the outstanding balance owed by Byte. 07. June 10: Byte paid $22.250 on the balance it owed on the June 2 purchase of computer equipment 08. June 14: A one-year insurance policy covering its computer equipment was purchased by Byte for $5.472 in cash. The effective date of the policy was June 16. 09. June 16: Computer consultation revenue of $6,500 was received. 10. June 16: Byte purchased a building and the land it is on for $101.000. to house its repair facilities and to store computer equipment. The lot on which the building is located is valued at $16.000. The balance of the cost is to be allocated to the building. Byte made a cash down payment of $10,100 and executed a mortgage for the balance. The mortgage is payable in eight equal annual installments beginning July 1. 11. June 17: Cash of $4.600 was paid for rent for June and July. Put the total amount into the Prepaid Rent account. 12. June 17: Received a bill of $325 from the local newspaper for advertising. 13. June 21: Billed various miscellaneous local customers $4,400 for consulting services performed. 14. June 21: A fax machine for the office was purchased for $775 cash. 15. June 21: Accounts payable in the amount of $560 were paid. 16. June 22: Paid the advertising bill that was received on June 17. 17. June 22: Received a bill for $1,190 from Computer Parts and Repair Co. for repairs to the computer equipment 18. June 22: Paid salaries of $985 to equipment operators for the week ending June 18. 19. June 23: Cash in the amount of $3,525 was received on billings. June 23: Purchased office supplies for $630 on credit. Record the purchase as an increase to the 20. assets. 21. June 28: Billed $5,490 to miscellaneous customers for services performed to June 25. 22. June 29: Cash in the amount of $5,201 was received for billings. 23. June 29: Paid the bill received on June 22, from Computer Parts and Repairs Co. 24. June 29: Paid salaries of $985 to equipment operators for the week ending June 25. 25. June 30: Received a bill for the amount of $915 from O&G 01 and Gas Co. 26. June 30: Paid a cash dividend of $0.17 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.] Adjusting Entries - Round to two decimal places. 27. The rent payment made on June 17 was for June and July. Expense the amount associated with one month's rent. 28. A physical inventory showed that only $259.00 worth of office supplies remained on hand as of June 30. 26. June 30: Paid a cash dividend of $0.17 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.] Adjusting Entries - Round to two decimal places. 27. The rent payment made on June 17 was for June and July. Expense the amount associated with one month's rent. 28. A physical inventory showed that only $259.00 worth of office supplies remained on hand as of June 30. 29. The annual interest rate on the mortgage payable was 7.75 percent. Interest expense for one-half month should be computed because the building and land were purchased and the liability incurred on June 16. 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. 31. A review of Byte's job worksheets show that there are unbilled revenues in the amount of $5,000 for the period of June 28-30. 32 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 $7,000. The office equipment has a scrap value of $450. The computer equipment has no scrap value. Calculate the depreciation for one month. 33. A review of the payroll records show that unpaid salaries in the amount of $591 are owed by Byte for three days, June 28 - 30. 34. 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 on a 360 day year. [IMPORTANT NOTE: The original note on the computer equipment purchased on June 2 was $116.000. On June 10, eight days later, $22.250 was repaid. Interest expense must be calculated on the $116.000 for eight days. In addition, interest expense on the $93.750 balance of the loan ($116.000 less $22.250 = $93.750) must be calculated for the 20 days remaining in the month of June.] 35. Income taxes are to be computed at the rate of 25 percent of net income before taxes. [IMPORTANT NOTE: Since the income taxes are a percent of the net income you will want to prepare the Income Statements through the Net Income Before Tax line. The worksheet contains all of the accounts and their balances which you can then transfer to the appropriate financial statement.] 35. Income taxes are to be computed at the rate of 25 percent of net income before taxes. [IMPORTANT NOTE: Since the income taxes are a percent of the net income you will want to prepare the Income Statements through the Net Income Before Tax line. The worksheet contains all of the accounts and their balances which you can then transfer to the appropriate financial statement.] Closing Entries 36. Close the revenue accounts. 37. Close the expense accounts. 38. Close the income summary account. 39. Close the dividends account. 27 27 4,600.00 Jun 30 Jun 30 5010 Rent Expense 1140 Prepaid Rent 1 month Rent 1 month Rent 4,600.00 259.00 28 28 Jun 30 Jun 30 5080 Supplies Expense 1150 Office Supplies Supplies used Supplies used 259.00 2,935.31 29 29 Jun 30 Jun 30 5090 Interest Expense 2103 Interest Payable 1/2 Month Interest Mortgage 1/2 Month Interest Mortgage 2,935.31 235.00 30 30 Jun 30 Jun 30 5100 Insurance Expense 1130 Prepaid Insurance 1/2 Month Interest Expense 1/2 Month Interest Expense 235.00 31 31 5,000.00 Jun 30 Jun 30 1120 Accounts Receivable Unbilled Revenue 4100 Computer & Consultin Unbilled Revenue 5,000.00 3,514.00 32 32 32 32 Jun 30 Jun 30 Jun 30 Jun 30 # 32 Not in Balance by-$.80 5110 Depreciation Expense Depreciation Expense 1212 Accum. Depr.-Office Depreciation Expense 1312 Accum. Depr.-ComputDepreciation Expense 1412 Accum. Depr.-Building Depreciation Expense 22.68 3,195.83 296.29 591.00 33 33 Jun 30 Jun 30 2101 Accounts Payable 2105 Salaries Payable Unpaid Salaries Unpaid Salaries 591.00 902.00 34 34 Jun 30 Jun 30 5090 Interest Expense 2103 Interest Payable Interest On Computer Equipment Interest On Computer Equipment 902.00 2,923.20 35 35 Jun 30 Jun 30 5120 Income Tax Expense Income Taxes June 2106 Income Taxes Payable Income Taxes June 2,923.20 23,215.00 36 36 Jun 30 Jun 30 4100 Computer & Consultin Closing Revenue Accounts 3400 Income Summary Closing Revenue Accounts 23,215.00 14,445.41 37 37 37 37 37 37 37 37 37 37 37 Jun 30 Jun 30 Jun 30 Jun 30 Jun 30 Jun 30 Jun 30 Jun 30 Jun 30 Jun 30 Jun 30 #37 Not in Balance by -$2,480.00 3400 Income Summary Closing Entries Expense 5010 Rent Expense Closing Entries Expense 5020 Salary Expense Closing Entries Expense 5030 Advertising Expense Closing Entries Expense 5040 Repairs & Maint. ExpeClosing Entries Expense 5050 Oil & Gas Expense Closing Entries Expense 5080 Supplies Expense Closing Entries Expense 5090 Interest Expense Closing Entries Expense 5100 Insurance Expense Closing Entries Expense 5110 Depreciation Expense Closing Entries Expense 5120 Income Tax Expense Closing Entries Expense 4,600.00 1,620.00 325.00 1,190.00 915.00 259.00 1,344.41 235.00 3,514.00 2,923.00 8,769.59 38 38 Jun 30 Jun 30 3400 Income Summary 3200 Retained Earnings Closing IS to RE Closing IS to RE 8,769.59 39 39 Jun 30 Jun 30 3200 Retained Earnings 3300 Dividends Closing Dividends to Retained Earni 1,727.88 Closing Dividends to Retained Earnings 1 1,727.88 A Byte of Accounting, Inc. Worksheet For Period Ending June 30, 2020 Adjusting Entries Debit Credit Unadjusted Trial Balance Debit Credit 69, 173.80 1,164.00 5,472.00 4,600.00 630.00 1,735.00 Adjusted Trial Balance Debit Credit 69,173.80 6,164.00 5,237.00 5,000.00 235.00 4,600.00 259.00 371.00 1,735.00 22.68 22.68 190,360.00 190,360.00 3,195.83 3,195.83 85,000.00 85,000.00 Account Number Name 1110 Cash 1120 Accounts Receivable 1130 Prepaid Insurance 1140 Prepaid Rent 1150 Office Supplies 1211 Office Equip. 1212 Accum. Depr.-Office Equip. 1311 Computer Equip 1312 Accum. Depr.-Computer Equip. 1411 Building Cost 1412 Accum. Depr.-Building 1510 Land 2101 Accounts Payable 2102 Advanced Payments 2103 Interest Payable 2105 Salaries Payable 2106 Income Taxes Payable 2201 Mortgage Payable 2202 Notes Payable 3100 Capital Stock 3200 Retained Earnings 3300 Dividends 296.29 296.29 16,000.00 16,000.00 1,545.00 591.00 954.00 3,837.31 591.00 2,923.20 3,837.31 591.00 2,923.20 90,900.00 93,750.00 177,320.00 90,900.00 93,750.00 177,320.00 1,370.20 1,370.20 16,390.00 5,000.00 21,390.00 4,600.00 4100 Computer & Consulting Revenue 5010 Rent Expense 5020 Salary Expense 5030 Advertising Expense 1,970.00 325.00 4,600.00 1,970.00 325.00 3200 Retained Earnings 3300 Dividends 1,370.20 1,370.20 16,390.00 5,000.00 21,390.00 4,600.00 4100 Computer & Consulting Revenue 5010 Rent Expense 5020 Salary Expense 5030 Advertising Expense 5040 Repairs & Maint. Expense 5050 Oil & Gas Expense 5080 Supplies Expense 5090 Interest Expense 5100 Insurance Expense 5110 Depreciation Expense 5120 Income Tax Expense 1,970.00 325.00 1,190.00 915.00 4,600.00 1,970.00 325.00 1,190.00 915.00 259.00 3,837.31 235.00 3,514.00 2,923.20 259.00 3,837.31 235.00 3,514.00 2,923.20 TOTAL 379,905.00 379,905.00 20,959.51 20,960.31 395,179.51 395,180.31 A Byte of Accounting, Inc. Income Statement For Month Ending June 30, 2020 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 Net Income Before Tax Income Tax Expense (Road to two decimal places) Net Income After Tax A Byte of Accounting, Inc. Statement of Changes in Retained Earnings For Month Ending June 30, 2020 Total Balance, Beginning of Period Net Income Dividends Balance, End of Period A Byte of Accounting, Inc. Balance Sheet As of June 30, 2020 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 Current Liabilities Accounts Payable 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