On July 1, 2016, Sean McConnell established his own accounting practice. Selected transactions for the first few days of July follow.

DATE

TRANSACTIONS

July

1

Signed a lease for an office and issued Check 101 for $12,150 to pay the rent in advance for six months.

1

Borrowed money from First National Bank by issuing a four-month, 6 percent note for $40,800; received $39,984 because the bank deducted the interest in advance.

1

Signed an agreement with Young Corp. to provide accounting and tax services for one year at $5,300 per month; received the entire fee of $63,600 in advance.

1

Purchased office equipment for $26,400 from Office Outfitters; issued a two-month, 6 percent note in payment. The equipment is estimated to have a useful life of six years and a $1,920 salvage value. The equipment will be depreciated using the straight-line method.

1

Purchased a one-year insurance policy and issued Check 102 for $1,692 to pay the entire premium.

3

Purchased office furniture for $15,100 from Office Warehouse; issued Check 103 for $10,400 and agreed to pay the balance in 60 days. The equipment has an estimated useful life of five years and a $1,600 salvage value. The office furniture will be depreciated using the straight-line method.

5

Purchased office supplies for $1,930 with Check 104. Assume $860 of supplies are on hand July 31, 2016.

1.	Record the transactions in the general journal. Assume that the firm initially records prepaid expenses as assets and unearned income as a liability for the year 2016.