On July 1, 20X1, Cherie Wang established Cherie Wang Financial Services. Selected transactions for the first few days of July follow.

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. Omit explanations.
2. Record the adjusting journal entries that must be made on July 31, 20X1, on page 2 of the general journal. Omit descriptions.

Analyze: 

What balance should be reflected in Unearned Financial Service Fees at July 31, 20X1?

Transcribed Image Text:

DATE 20X1 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 1 1 1 3 TRANSACTIONS 5 Borrowed money from Bancorp West by issuing a four-month, 9 percent note for $40,000; received $38,800 because the bank deducted the interest in advance. Signed an agreement with Kroll Corp. to provide financial services for one year at $7,000 per month; received the entire fee of $84,000 in advance. The $84,000 was credited to Unearned Financial Service Fees. 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. Purchased a one-year insurance policy and issued Check 102 for $1,740 to pay the entire premium. Purchased office furniture for $16,080 from Furniture Warehouse; issued Check 103 for $8,480 and agreed to pay the balance in 60 days. The equipment has an esti- mated useful life of four years and a $1,200 salvage value. The office furniture will be depreciated using the straight-line method. Purchased office supplies for $2,010 with Check 104. Assume $900 of supplies are on hand July 31, 20X1.