Question: On July 1 2016 Sean McConnell established his own accounting

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 $14,700 to pay the rent in advance for six months.
1 Borrowed money from First National Bank by issuing a four-month, 9 percent note for $40,000; received $38,800 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 $7,000 per month; received the entire fee of $84,000 in advance.
1 Purchased office equipment for $15,900 from Office Outfitters; issued a two-month, 12 percent note in payment. The equipment is estimated to have a useful life of five years and a $1,500 salvage value. The equipment will be depreciated using the straight-line method.
1 Purchased a one-year insurance policy and issued Check 102 for $1,740 to pay the entire premium.
3 Purchased office furniture for $16,080 from Office Warehouse; issued Check 103 for $8,480 and agreed to pay the balance in 60 days. The equipment has an estimated useful life of four years and a $1,200 salvage value. The office furniture will be depreciated using the straight-line method.
5 Purchased office supplies for $2,010 with Check 104. Assume $900 of supplies are on hand July 31, 2016.

INSTRUCTIONS
1. Record the transactions on page 1 of the general journal. Omit descriptions. Assume that the firm initially records prepaid expenses as assets and unearned income as a liability.
2. Record the adjusting journal entries that must be made on July 31, 2016, on page 2 of the general journal. Omit descriptions.

Analyze:
What balance should be reflected in Unearned Accounting Fees at July 31, 2016?


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  • CreatedAugust 08, 2014
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