*(a) *(b) Date Account Titles and Explanation Debit Credit *(c) At June 30, 2017
ID: 2580120 • Letter: #
Question
*(a)
*(b)
Date
Account Titles and Explanation
Debit
Credit
*(c)
At June 30, 2017, the end of its most recent fiscal year, Blue Computer Consultants’ post-closing trial balance was as follows:Debit Credit Cash $3,970 Accounts receivable 910 Supplies 520 Accounts payable $300 Unearned service revenue 850 Common stock 2,700 Retained earnings 1,550 $5,400 $5,400
The company underwent a major expansion in July. New staff was hired and more financing was obtained. Blue conducted the following transactions during July 2017, and adjusts its accounts monthly.
July 1 Purchased equipment, paying $2,800 cash and signing a 2-year note payable for $15,200. The equipment has a 4-year useful life. The note has a 6% interest rate which is payable on the first day of each following month. 2 Issued 15,200 shares of common stock for $38,000 cash. 3 Paid $3,000 cash for a 12-month insurance policy effective July 1. 3 Paid the first 2 (July and August 2017) months’ rent for an annual lease of office space for $3,000 per month. 6 Paid $2,900 for supplies. 9 Visited client offices and agreed on the terms of a consulting project. Blue will bill the client, Connor Productions, on the 20th of each month for services performed. 10 Collected $910 cash on account from Milani Brothers. This client was billed in June when Blue performed the service. 13 Performed services for Fitzgerald Enterprises. This client paid $850 in advance last month. All services relating to this payment are now completed. 14 Paid $300 cash for a utility bill. This related to June utilities that were accrued at the end of June. 16 Met with a new client, Thunder Bay Technologies. Received $9,100 cash in advance for future services to be performed. 18 Paid semi-monthly salaries for $8,400. 20 Performed services worth $21,300 on account and billed customers. 20 Received a bill for $1,700 for advertising services received during July. The amount is not due until August 15. 23 Performed the first phase of the project for Thunder Bay Technologies. Recognized $7,600 of revenue from the cash advance received July 16. 27 Received $11,400 cash from customers billed on July 20.
Adjustment data:
1. Adjustment of prepaid insurance. 2. Adjustment of prepaid rent. 3. Supplies used, $950. 4. Equipment depreciation, $375 per month. 5. Accrual of interest on note payable. 6. Salaries for the second half of July, $8,400, to be paid on August 1. 7. Estimated utilities expense for July, $610 (invoice will be received in August). 8. Income tax for July, $910, will be paid in August.
The chart of accounts for Blue Computer Consultants contains the following accounts: Cash, Accounts Receivable, Supplies, Prepaid Insurance. Prepaid Rent, Equipment, Accumulated Depreciation—Equipment, Accounts Payable, Notes Payable, Interest Payable, Income Taxes Payable, Salaries and Wages Payable, Unearned Service Revenue, Common Stock, Retained Earnings, Dividends, Income Summary, Service Revenue, Supplies Expense, Depreciation Expense, Insurance Expense, Salaries and Wages Expense, Advertising Expense, Income Tax Expense, Interest Expense, Rent Expense, Supplies Expense, and Utilities Expense.
Explanation / Answer
Cash Accounts receivable Supplies Date Debit Date Credit Date Debit Date Credit Date Debit Date Credit July 1 Bal 3970 July.1 2800 July 1 Bal 910 July.10 910 July 1 Bal 520 July.31 950 July.2 38000 July.3 3000 July.20 21300 July.27 11400 July.6 2900 July.10 910 July.3 6000 July.16 9100 July.6 2900 22210 12310 3420 950 July.27 11400 July.14 300 End.Bal. 9900 End.Bal. 2470 July.18 8400 Accounts payable Unearned service revenue Common stock Date Debit Date Credit Date Debit Date Credit Date Debit Date Credit July.14 300 July 1 Bal 300 July.13 850 July 1 Bal 850 July 1 Bal 2700 July.20 1700 July.23 7600 July.16 9100 July.2 38000 July.31 610 300 2610 8450 9950 0 40700 End.Bal. 2310 End.Bal. 1500 End.Bal. 40700 Retained earnings Equipment Note payable Date Debit Date Credit Date Debit Date Credit Date Debit Date Credit July 1 Bal 1550 July.1 18000 July.1 15200 0 1550 18000 0 0 15200 End.Bal. 1550 End.Bal. 15200 Prepaid insurance Rent expense Prepaid rent Date Debit Date Credit Date Debit Date Credit Date Debit Date Credit July.3 3000 July.31 250 July.31 3000 July.3 6000 July.31 3000 3000 250 3000 0 6000 3000 End.Bal. 2750 End.Bal. 3000 Service revenue Salaries and wges expense Advertising expense Date Debit Date Credit Date Debit Date Credit Date Debit Date Credit July.13 850 July.18 8400 July.20 1700 July.20 21300 July.31 8400 July.23 7600 0 29750 16800 0 1700 0 Insurance expense Supplies expense Depreciation expense Date Debit Date Credit Date Debit Date Credit Date Debit Date Credit July.3 250 July.31 950 July.31 375 250 0 950 0 375 0 Accumulated depreciation Interest expense Interest payable Date Debit Date Credit Date Debit Date Credit Date Debit Date Credit July.31 375 July.31 76 July.31 76 0 375 76 0 0 76 Utilities expense Salaries and wages payable Income tax expense Date Debit Date Credit Date Debit Date Credit Date Debit Date Credit July.31 610 July.31 8400 July.31 910 610 0 0 8400 910 0 End.Bal. 8400 Income tax payable Date Debit Date Credit July.31 910 0 910 End.Bal. 910
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