On July 1, 2019, Tim Stein established his own accounting practice. 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, 2019, on page 2 of the general journal. Omit descriptions.

DATE TRANSACTIONS

2019

July 1 Signed a lease for an office and issued Check 101 for $14,400 to pay the rent in advance for six months.

1 Borrowed money from Second National Bank by issuing a four-month, 6 percent note for

$33,600; received $32,928 because the bank deducted the interest in advance.

1 Signed an agreement with Carter Corp. to provide accounting and tax services for one year at $6,800 per month; received the entire fee of $81,600 in advance.

1 Purchased office equipment for $20,400 from Office Outfitters; issued a two-month, 9 percent note in payment. The equipment is estimated to have a useful life of four years and a $2,160 salvage value. The equipment will be depreciated using the straight-line method.

1 Purchased a one-year insurance policy and issued Check 102 for $1,716 to pay the entire premium.

3 Purchased office furniture for $23,200 from Furniture Warehouse; issued Check 103 for

$13,400 and agreed to pay the balance in 60 days. The equipment has an estimated useful life of six years and a $1,600 salvage value. The office furniture will be depreciated using the straight-line method.

5 Purchased office supplies for $1,970 with Check 104. Assume $880 of supplies are on hand July 31, 2019.

Analyze:

What balance should be reflected in Unearned Accounting Fees at July 31, 2019?