Description of transaction 01 June 1 Hudson Bloom invested 1

	Description of transaction
01.	June 1: Hudson Bloom invested $164,684.00 cash and computer equipment with a fair market value of $40,560.00 in his new business, Byte of Accounting.
02.	June 1:   Check # 5000 was used to purchased office equipment costing $1,144.00 from Office Express. The invoice number was 87417.
03.	June 1:   Check # 5001 was used to purchased computer equipment costing $12,480.00 from Taylor Jones. The invoice number was 20117.
04.	June 2: Check # 5002 was used to make a down payment of $36,000.00 on additional computer equipment that was purchased from Royce Computers, invoice number 76542. The full price of the computer was $180,000.00. A five-year note was executed by Byte for the balance.
05.	June 4: Additional office equipment costing $400.00 was purchased on credit from Discount Computer Corporation. The invoice number was 98432.
06.	June 8: Unsatisfactory office equipment costing $80.00 from invoice number 98432 was returned to Discount Computer for credit to be applied against the outstanding balance owed by Byte.
07.	June 10: Check # 5003 was used to make a $27,500.00 payment reducing the prinicpal owed on the June 2 purchase of computer equipment from Royce Computers.
08.	June 14: Check # 5004 was used to purchase a one-year insurance policy covering its computer equipment for $5,304.00 from Seth\'s Insurance. The effective date of the policy was June 16 and the invoice number was 2387.
09.	June 16: A check in the amount of $8,000.00 was received for services performed for Pitman Pictures.
10.	June 16: Byte purchased a building and the land it is on for $107,000.00 to house its repair facilities and to store computer equipment. The lot on which the building is located is valued at $17,000.00. The balance of the cost is to be allocated to the building. Check # 5005 was used to make the down payment of $10,700.00. A thirty year mortgage with an inital payement due on August 1st, was established for the balance.
11.	June 17: Check # 5006 for $6,000.00 was paid for rent of the office space for June, July and August.
12.	June 17: Received invoice number 26354 in the amount of $350.00 from the local newspaper for advertising.
13.	June 21: Billed various miscellaneous local customers $4,400.00 for consulting services performed.
14.	June 21: Check # 5008 was used to purchase a fax machine for the office from Office Machines Express for $850.00. The invoice number was 975-328.
15.	June 21: Accounts payable in the amount of $320.00 were paid with Check # 5007.
16.	June 22: Check # 5010 was used to pay the advertising bill that was received on June 17.
17.	June 22: Received a bill for $1,140.00 from Computer Parts and Repair Co. for repairs to the computer equipment. The invoice number was 43254.
18.	June 22: Check # 5009 was used to pay salaries of $860.00 to equipment operators for the week ending June 18. Ignore payroll taxes.
19.	June 23: Cash in the amount of $3,525.00 was received on billings.
20.	June 23: Purchased office supplies for $630.00 from Staples on account. The invoice number was 65498.
21.	June 28: Billed $6,120.00 to miscellaneous customers for services performed to June 25.
22.	June 29: Cash in the amount of $5,799.00 was received for billings.
23.	June 29: Paid the bill received on June 22, from Computer Parts and Repairs Co with Check # 5011.
24.	June 29: Check # 5012 was used to pay salaries of $860.00 to equipment operators for the week ending June 25. Ignore payroll taxes.
25.	June 30: Received a bill for the amount of $790.00 from O & G Oil and Gas Co. The invoice number was 784537.
26.	June 30: Check # 5013 was used to pay for airline tickets of $2,300.00 to send the kids to Grandma Ellen for the July 4th holiday.
	Adjusting Entries - Round to two decimal places.
27.	The rent payment made on June 17 was for June, July and August. Expense the amount associated with one month\'s rent.
28.	A physical inventory showed that only $259.00 worth of office supplies remained on hand as of June 30.
29.	The annual interest rate on the mortgage payable was 7.00 percent. Interest expense for one-half month should be computed because the building and land were purchased and the liability incurred on June 16.
30.	Record a journal entry to reflect that one half month\'s insurance has expired.
31.	A review of Byte’s job worksheets show that there are unbilled revenues in the amount of $5,250 for the period of June 28-30.
	The fixed assets have estimated useful lives as follows:
	Building - 31.5 years
	Computer Equipment - 5.0 years
32.	Office Equipment - 7.0 years
	Use the straight-line method of depreciation. Management has decided that assets purchased during a month are treated as if purchased on the first day of the month. The building’s scrap value is $8,000. The office equipment has a scrap value of $400. The computer equipment has no scrap value. Calculate the depreciation for one month.
33.	A review of the payroll records show that unpaid salaries in the amount of $516.00 are owed by Byte for three days, June 28 - 30. Ignore payroll taxes.
34.	The note payable to Royce Computers (transactions 04 and 07) is a five-year note, with interest at the rate of 12 percent annually. Interest expense should be computed based on a 360 day year.
	Closing Entries
35.	Close the revenue accounts.
36.	Close the expense accounts.
37.	Close the income summary account.
38.	Close the withdrawals account.

Solution

S No Date Account Debit Credit 1 Jun 1 Cash 164684 1 Jun 1 Computer Equipment 40560 1 Jun 1 Capital, Hudson Bloom 205244 2 Jun 1 Office Equipment 1144 2 Jun 1 Cash 1144 3 Jun 1 Computer Equipment 12480 3 Jun 1 Cash 12480 4 Jun 2 Computer Equipment 180000 4 Jun 2 Note payable 144000 4 Jun 2 Cash 36000 5 Jun 4 Office Equipment 400 5 Jun 4 Accounts Payable 400 6 Jun 8 Accounts Payable 80 6 Jun 8 Office Equipment 80 7 Jun 10 Note payable 27500 7 Jun 10 Cash 27500 8 Jun 14 Prepaid Insurance 5304 8 Jun 14 Cash 5304 9 Jun 16 Cash 8000 9 Jun 16 Earned Fee Revenue 8000 10 Jun 16 Land 17000 10 Jun 16 Building 90000 10 Jun 16 Cash 10700 10 Jun 16 Mortgage payable 96300 11 Jun 17 Prepaid Rent 6000 11 Jun 17 Cash 6000 12 Jun 17 Advertising Expense 350 12 Jun 17 Accounts Payable 350 13 Jun 21 Accounts Receivable 4400 13 Jun 21 Earned Fee Revenue 4400 14 Jun 21 Fax Machine 850 14 Jun 21 Cash 850 15 Jun 21 Accounts Payable 320 15 Jun 21 Cash 320 16 Jun 22 Accounts Payable 350 16 Jun 22 Cash 350 17 Jun 22 Repair Expense 1140 17 Jun 22 Accounts Payable 1140 18 Jun 22 Salaries Expense 860 18 Jun 22 Cash 860 19 Jun 23 Cash 3525 19 Jun 23 Accounts Receivable 3525 20 Jun 23 Office Supplies 630 20 Jun 23 Accounts Payable 630 21 Jun 28 Accounts Receivable 6120 21 Jun 28 Earned Fee Revenue 6120 22 Jun 29 Cash 5799 22 Jun 29 Accounts Receivable 5799 23 Jun 29 Accounts Payable 1140 23 Jun 29 Cash 1140 24 Jun 29 Salaries Expense 860 24 Jun 29 Cash 860 25 Jun 30 Fuel Expense 790 25 Jun 30 Accounts Payable 790 26 Jun 30 Withdrawal, Hudson 2300 26 Jun 30 Cash 2300 Adjusting Entries 1 Jun 30 Rent Expense (6000/3) 2000 1 Jun 30 Prepaid Rent 2000 2 Jun 30 Office Supply Expense 630-259 371 2 Jun 30 Office Supplies 371 3 Jun 30 Interest Expense (96300*7%*half month) 281 3 Jun 30 Interest Payable 281 4 Jun 30 Insurance Expense (5304 for a year, for half a month=5304/24) 221 4 Jun 30 Prepaid Insurance 221 5 Jun 30 Unearned Fees 5250 5 Jun 30 Earned Fee Revenue 5250 6 Jun 30 Interest Expense 1237 6 Jun 30 Interest Payable 1237 6 Jun 30 6 Jun 30 Salaries Expense 516 6 Jun 30 Salaries Payable 516 7 Apr 30 Depreciation Expense 4114 7 Apr 30 Accumulated Depcreciation 4114 Closing Entries Apr 30 Earned Fee Revenue 23770 Apr 30 Income Summary 23770 (closing Revenue Account) Apr 30 Income Summary 12739 Apr 30 Salaries Expense 2236 Apr 30 Advertising Expense 350 Apr 30 Repair Expense 1140 Apr 30 Fuel Expense 790 Apr 30 Rent Expense (6000/3) 2000 Apr 30 Office Supply Expense 630-259 371 Apr 30 Interest Expense (96300*7%*half month) 281 Apr 30 Insurance Expense (5304 for a year, for half a month=5304/24) 221 Apr 30 Interest Expense 1237 Apr 30 Depreciation Expense 4114 (Closing Expense Account) Apr 30 Income Summary 11031 Apr 30 Retained Earning 11031 (Closing Income Summary account) Apr 30 Capital, Hudson 2300 Apr 30 Withdrawal, Hudsan 2300 (Closing Withdrawal Account) Interest Working 144000*12%*7/360 336 117500*12%*23/360 901 Depreciation Cost Salvage Value Life Annual Dep=(Cost-Salvage)/Life Month Dep Building 90000 8000 31.5 2603 217 Office Equipment 1464 400 7 152 13 Computer Equipment 233040 0 5 46608 3884