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

 

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On July 1, 20X1, Cherie Wang established Cherie Wang Financial Services. Selected transactions for the first few days of July follow. DATE TRANSACTIONS 20x1 Julyl 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 Bancorp West 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 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 Feen. 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 nethod. 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 Furniture 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, 20x1. Required: 1. Record the transactions in the general journal. Assume that the firm Initially records prepaid expenses as assets and unearned income as a liability for the year 20X1. 2. Record the adjusting journal entries that must be made on July 31, 20X1. Analyze: What balance should be reflected in Unearned Financial Service Fees at July 31, 20X1? On July 1, 20X1, Cherie Wang established Cherie Wang Financial Services. Selected transactions for the first few days of July follow. DATE TRANSACTIONS 20x1 Julyl 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 Bancorp West 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 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 Feen. 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 nethod. 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 Furniture 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, 20x1. Required: 1. Record the transactions in the general journal. Assume that the firm Initially records prepaid expenses as assets and unearned income as a liability for the year 20X1. 2. Record the adjusting journal entries that must be made on July 31, 20X1. Analyze: What balance should be reflected in Unearned Financial Service Fees at July 31, 20X1?

Answer rating: 100% (QA)

1 Date Accounts Debit Credit 20X1 July 1 Prepaid rent 14700 Cash 14700 July 1 Cash 38800 Prepaid int... View the full answer