01. June 1: Byte of Accounting, Inc. acquired $48,000 in cash from Lauryn and is
ID: 2456236 • Letter: 0
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01. June 1: Byte of Accounting, Inc. acquired $48,000 in cash from Lauryn and issued 2,400 shares of its common stock. 02. June 1: Byte of Accounting, Inc. issued 2,530 shares of its common stock to Elisa Tatham after $20,800 in cash and computer equipment with a fair market value of $29,800 were received. 03. June 1: Byte of Accounting, Inc. issued 2,093 shares of its common stock after acquiring from Courtney $31,000 in cash, computer equipment with a fair market value of $10,400 and office equipment with a fair value of $460. 04. June 2: A down payment of $28,000 in cash was made on additional computer equipment that was purchased for $140,000. A five-year note was executed by Byte for the balance. 05. June 4: Additional office equipment costing $600 was purchased on credit from Discount Computer Corporation. 06. June 8: Unsatisfactory office equipment costing $120 was returned to Discount Computer for credit to be applied against the outstanding balance owed by Byte. 07. June 10: Byte paid $21,500 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 $5,136 in cash. The effective date of the policy was June 16. 09. June 16: A check in the amount of $7,500 was received for consulting revenue. 10. June 16: Byte purchased a building and the land it is on for $143,000, to house its repair facilities and to store computer equipment. The lot on which the building is located is valued at $23,000. The balance of the cost is to be allocated to the building. Byte made a cash down payment of $14,300 and executed a mortgage for the balance. The mortgage is payable in eight equal annual installments beginning July 1. 11. June 17: Cash of $5,100 was paid for rent for June, July and August. Put the total amount into the Prepaid Rent account. 12. June 17: Received a bill of $425 from the local newspaper for advertising. 13. June 21: Accounts payable in the amount of $480 were paid. 14. June 21: A fax machine for the office was purchased for $725 cash. 15. June 21: Billed various miscellaneous local customers $4,900 for consulting services performed. 16. June 22: Paid salaries of $910 to equipment operators for the week ending June 18. 17. June 22: Received a bill for $1,140 from Computer Parts and Repair Co. for repairs to the computer equipment. 18. June 22: Paid the advertising bill that was received on June 17. 19. June 23: Purchased office supplies for $630 on credit. Record the purchase as an increase to the assets. 20. June 23: Cash in the amount of $3,925 was received on billings. 21. June 28: Billed $6,225 to miscellaneous customers for services performed to June 25. 22. June 29: Paid the bill received on June 22, from Computer Parts and Repairs Co. 23. June 29: Cash in the amount of $5,899 was received for billings. 24. June 29: Paid salaries of $910 to equipment operators for the week ending June 25. 25. June 30: Received a bill for the amount of $790 from O & G Oil and Gas Co. 26. June 30: Paid a cash dividend of $0.24 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, July and August. 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 8.75 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 $9,250 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 $7,500. The office equipment has a scrap value of $350. 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 $546.00 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 $112,000. On June 10, eight days later, $21,500 was repaid. Interest expense must be calculated on the $112,000 for eight days. In addition, interest expense on the $90,500 balance of the loan ($112,000 less $21,500 = $90,500) 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.] Closing Entries 36. Close the revenue accounts. 37. Close the expense accounts. 38. Close the income summary account. 39. Close the dividends account. 01. June 1: Byte of Accounting, Inc. acquired $48,000 in cash from Lauryn and issued 2,400 shares of its common stock. 02. June 1: Byte of Accounting, Inc. issued 2,530 shares of its common stock to Elisa Tatham after $20,800 in cash and computer equipment with a fair market value of $29,800 were received. 03. June 1: Byte of Accounting, Inc. issued 2,093 shares of its common stock after acquiring from Courtney $31,000 in cash, computer equipment with a fair market value of $10,400 and office equipment with a fair value of $460. 04. June 2: A down payment of $28,000 in cash was made on additional computer equipment that was purchased for $140,000. A five-year note was executed by Byte for the balance. 05. June 4: Additional office equipment costing $600 was purchased on credit from Discount Computer Corporation. 06. June 8: Unsatisfactory office equipment costing $120 was returned to Discount Computer for credit to be applied against the outstanding balance owed by Byte. 07. June 10: Byte paid $21,500 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 $5,136 in cash. The effective date of the policy was June 16. 09. June 16: A check in the amount of $7,500 was received for consulting revenue. 10. June 16: Byte purchased a building and the land it is on for $143,000, to house its repair facilities and to store computer equipment. The lot on which the building is located is valued at $23,000. The balance of the cost is to be allocated to the building. Byte made a cash down payment of $14,300 and executed a mortgage for the balance. The mortgage is payable in eight equal annual installments beginning July 1. 11. June 17: Cash of $5,100 was paid for rent for June, July and August. Put the total amount into the Prepaid Rent account. 12. June 17: Received a bill of $425 from the local newspaper for advertising. 13. June 21: Accounts payable in the amount of $480 were paid. 14. June 21: A fax machine for the office was purchased for $725 cash. 15. June 21: Billed various miscellaneous local customers $4,900 for consulting services performed. 16. June 22: Paid salaries of $910 to equipment operators for the week ending June 18. 17. June 22: Received a bill for $1,140 from Computer Parts and Repair Co. for repairs to the computer equipment. 18. June 22: Paid the advertising bill that was received on June 17. 19. June 23: Purchased office supplies for $630 on credit. Record the purchase as an increase to the assets. 20. June 23: Cash in the amount of $3,925 was received on billings. 21. June 28: Billed $6,225 to miscellaneous customers for services performed to June 25. 22. June 29: Paid the bill received on June 22, from Computer Parts and Repairs Co. 23. June 29: Cash in the amount of $5,899 was received for billings. 24. June 29: Paid salaries of $910 to equipment operators for the week ending June 25. 25. June 30: Received a bill for the amount of $790 from O & G Oil and Gas Co. 26. June 30: Paid a cash dividend of $0.24 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, July and August. 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 8.75 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 $9,250 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 $7,500. The office equipment has a scrap value of $350. 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 $546.00 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 $112,000. On June 10, eight days later, $21,500 was repaid. Interest expense must be calculated on the $112,000 for eight days. In addition, interest expense on the $90,500 balance of the loan ($112,000 less $21,500 = $90,500) must be calculated for the 20 days remaining in the month of June.] 35. Income taxes are to be computed at the rate of 25 percent of net income before taxes. [IMPORTANT NOTE: Since the income taxes are a percent of the net income you will want to prepare the Income Statements through the Net Income Before Tax line. The worksheet contains all of the accounts and their balances which you can then transfer to the appropriate financial statement.] Closing Entries 36. Close the revenue accounts. 37. Close the expense accounts. 38. Close the income summary account. 39. Close the dividends account.Explanation / Answer
Date Account Title and explanation Debit ($) Credit ($) 1 Jun-01 Cash 48000 Common stock 48000 (Issued 2400 of its common stock in $48000) 2 1 Cash 20800 computer 29800 Common stock 50600 (issued 2530 shares of common stock in exchenage for cash and computer) 3 1 cash 31000 computer 10400 office quipment 460 Common stock 41860 (issued 2093 shares of common stock in exchenage for cash and computer and office equipment) 4 2 computer equipment 140000 cash 28000 notes payable 112000 (computer purchased by paying pertly in cash and partly by issuing a notes payable) 5 4 office equipment 600 Accounts payable 600 (office equipment purchased on account) 6 8 Notes payable 120 Office equipment 120 (ofiice equipment returned) 7 10 Notes Payable 21500 Cash 21500 ( Byte paid $21,500 on the balance it owed on the June 2 purchase of computer equipment.) 8 14 prepaid insurance 5136 Cash 5136 (A one-year insurance policy covering its computer equipment was purchased by Byte for $5,136 in cash.) 9 16 Bank 7500 Consulting Revenue 7500 (A check in the amount of $7,500 was received for consulting revenue) 10 16 Land 120000 building 23000 cash 14300 Mortgage payable 128700 (purchased land and building paying vash $14300 and the balance being the mortgage payable) 11 17 prepaid rent 5100 Cash 5100 (paid prepaid rent) 12 17 Advertising Expense 425 accounts payable 425 (recived bill for advertising expense) 13 21 Accounts payable 480 Cash 480 (paid accounts payable) 14 21 office eqipment - fax machine 725 Cash 725 (fax machine purchased) 15 21 accounts receivable 4900 Consulting revenue 4900 (billed customers for providing consulting services ) 16 22 salary 910 cash 910 (paid salary) 17 22 repairing expense 1140 accounta payable 1140 (received bill for repairinf computer) 18 22 accounts payable 425 cash 425 (paid the due amount for advertising expenses) 19 23 office supplies 630 accounts payable 630 (purchased office supplies on account) 20 23 cash 3925 accounts receivable 3925 (cash recieved from customers) 21 28 Accounts receivable 6225 Consulting service revenue 6225 (consulting service provided) 22 29 accounts payable 1140 cash 1140 (Paid the bill received on June 22, from Computer Parts and Repairs Co.) 23 29 accounts receivable 5899 cash 5899 (paid the dues) 24 29 salary 910 cash 910 (paid salary) 25 30 Other Expenses 790 accounts payable 790 (Received a bill for the amount of $790 from O & G Oil and Gas Co.) 26 30 Dividend 1685.52 cash 1685.52 (paid dividend @$0.24 per share on 7023 shares) 27 30 rent 1700 prepaid rent 1700 (rent for one month expensed) 28 30 supplies expense 371 office supplies 371 (supplies expense charged to office supplies account) 29 30 interest on mortgage 469.22 Interest payable 469.22 (interest on mortgage for half month recorded) 30 30 insurance expense 214 prepaid incurance 214 (insurance expense for half month charged to prepaid insurance account) 31 30 Accounts receivable 9250 consultancy service revenue 9250 (unbilled revenue now recorded) 32 30 depreciation-building 41.01 depreciation-computer 3003.33 depreciation-office equipment 15.65 Accumulated depreciation 3059.99 (depreciation for one month has been charged) 33 30 salary 546 salary payable 546 (unpaid salary recorded) 34 30 interest expense on notes payable 902.010 Interest payable 902.01 (interest on notes payable accrued and recorded) 36 31 Revenue 27875 Income summary 27875 (revenue account closed)_ 37 Income summary 15546.67 salary 2366 advertising expense 425 repairing expense 1140 rent 1700 insurance 214 depreciation 3059.99 interest on notes payable 902.01 interest on mortgage payable 469.22 supplies expense 371 other expenses 790 Income tax expense 4109.45 (expenses accounts closed) 38 Income summary 12328.34 retained earnings 12328.34 39 Retained earnings 1685.52 Dividend 1685.52 (closing of dividend account) 35 Income Statement $ $ Revenue 27875 less: operating cost salary 2366 advertising expense 425 repairing expense 1140 rent 1700 insurance 214 depreciation 3059.99 interest on notes payable 902.01 interest on mortgage payable 469.22 supplies expense 371 other expenses 790 11437.22 Income before tax 16437.78 less: Income tax @ 25% 4109.45 Net income 12328.34
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