The following were taken from the accounting records of Fly By Night Travel, Inc., a travel agency, as of January 31, 2022. On the forms provided, prepare in Income Statement and a Statement of Stockholders Equity for the month of January, and a classified Balance Sheet on January 31. Note that $6,000 of the note is due in 2022 and the balance of the note is due in 2020. (51 points) Accounts Payable $6,000 Accounts Receivable 19,000 Accumulated Depreciation Equipment 15,500 Advertising Expense 4,200 Common Stock 24,200 Cash 19,000 Depreciation Expense 6,000 Dividends 3,500 Equipment 45,000 Fees Earned 68,500 Notes Payable 19,000 Retained Earnings, January 1 13,500 Retained Earnings, January 31 ??? Salary Expense 50,000

Oleg Buzzini is the sole stockholder of Cutting Edge Fashion Corporation, a fashion consulting firm that earns its revenue in the form of consulting fees. Below are the transactions which occurred in the operation of Cutting Edge during the month of June. Record each transaction of Cutting Edge on the worksheet that has been supplied for this purpose, including entries in the description column in proper form where required. There is no need to total all of the columns. (36 points) July 1 Purchased Building at a cost of $170,000, making a cash down payment of $20,000. Borrowed the rest from a bank and issued a promissory note for the amount due. July 4 Performed consulting services for a client on account, $14,000 July 12 Oleg Buzzini purchased stock in Cutting Edge for $15,000. July 18 A customer paid $16,000 to Cutting Edge on account July 20 Paid salary of assistant, $5,000 July 31 Paid $1,000 to the bank, of which $150 was interest and the rest was a repayment of the loan. July 31 Cutting Edge paid Buzzini a dividend of $500

Refer to the accounting record that you completed in #2. (13 points) a) The building depreciated $500 for the month of July. Record the adjustment for depreciation in the accounting record you created in #2. (4 points) b) Answer in the space on the last page of this exam. A few sentences should do it. Suppose Olegs accountant neglected to make the adjustment for depreciation. What would be the effect on the income statement for the month of July? Be specific. (4 points) c) Answer in the space on the last page of this exam. A sentence or two should be sufficient. Suppose Olegs accountant neglected to make the adjustment for depreciation. What would be the effect on the cash flow statement for the month of July? Be specific. (3 points) d) Answer in the space on the last page of this exam. What amount do customers owe Cutting Edge at the end of July? (2 points)