Byte of Accounting, Inc._Journal to Financial statements

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Description

Building Blocks of Accounting .. A Financial Perspective

Corey, when you are ready to have your work graded you will upload this file CM1991.xls or CM1991.xlsx,

Byte of Accounting, Inc.
Corey Maida 2256
Transaction Description
of transaction
01. June 1: Byte of Accounting, Inc. issued 2,610
shares of its common stock to Jeremy after $23,100 in cash and computer
equipment with a fair market value of $34,320 were received.
02. June 1: Byte of Accounting, Inc. issued 2,457
shares of its common stock after acquiring
from Courtney $42,900 in cash, computer equipment with a fair market
value of $10,120 and office equipment with a fair value of $1,034.
03. June 1: Byte of Accounting, Inc. acquired $61,600
in cash from Corey Maida and issued 2,800 shares of its common stock.
04. June 2: A down payment of $31,000 in cash was made
on additional computer equipment that was purchased for $155,000. A five-year note was executed by Byte for
the balance.
05. June 4: Additional office equipment costing $500
was purchased on credit from Discount Computer Corporation.
06. June 8: Unsatisfactory office equipment costing
$100 was returned to Discount Computer
for credit to be applied against the outstanding balance owed by Byte.
07. June 10: Byte paid $23,750 on the balance it owed on
the June 2 purchase of computer equipment.
08. June
14: A one-year insurance policy covering its computer equipment was purchased
by Byte for $5,976 in cash. The effective date of the policy was June
16.
09. June 16: Computer consultation revenue of $7,500 was
received.
10. June 16: Byte purchased a building and the land it
is on for $149,000, to house its repair facilities and to store computer
equipment. The lot on which the
building is located is valued at $24,000. The balance of the cost is to be
allocated to the building. Byte made a
cash down payment of $14,900 and
executed a mortgage for the balance.
The mortgage is payable in eight equal annual installments beginning
July 1.
11. June 17: Cash of $3,200 was paid for rent for June
and July. Put the total amount into
the Prepaid Rent account.
12. June 17: Received a bill of $250 from the local
newspaper for advertising.
13. June 21: Billed
various miscellaneous local customers $4,500 for consulting services
performed.
14. June 21: A fax machine for the office was purchased
for $850 cash.
15. June 21: Accounts payable in the amount of $400 were
paid.
16. June 22: Paid the advertising bill that was received
on June 17.
17. June 22: Received a bill for $1,190 from Computer
Parts and Repair Co. for repairs to the computer equipment.
18. June 22: Paid salaries of $1,035 to equipment
operators for the week ending June 18.
19. June 23: Cash in the amount of $3,605 was received
on billings.
20. June 23: Purchased office supplies for $530 on
credit. Record the purchase as an
increase to the assets.
21. June 28: Billed $5,595 to miscellaneous customers
for services performed to June 25.
22. June 29: Cash in the amount of $5,300 was received
for billings.
23. June 29: Paid the bill received on June 22, from
Computer Parts and Repairs Co.
24. June 29: Paid salaries of $1,035 to equipment
operators for the week ending June 25.
25. June 30: Received a bill for the amount of $1,015
from O & G Oil and Gas Co.
26. June 30: Paid a cash dividend of $0.18 per share to
the three shareholders of Byte. [IMPORTANT NOTE: The number of shares of capital stock
outstanding can be determined from the first three transactions.]
Adjusting
Entries – Round to two decimal places.
27. The rent
payment made on June 17 was for June and July. Expense the amount associated with one
month’s rent.
28. A physical
inventory showed that only $214.00 worth of office supplies remained on hand
as of June 30.
29. The annual interest rate on the mortgage payable was
7.50 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. Information
relating to the prepaid insurance may
be obtained from the transaction recorded on June 14. Expense the amount associated with one half
month’s insurance.
31. A review of Byte’s job worksheets show that
there are unbilled revenues in the amount of $5,125 for the period of June
28-30.
32. The
fixed assets have estimated useful lives as follows:
Building – 31.5
years
Computer
Equipment – 5.0 years
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 $500. The
office equipment has a scrap value of $350.
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 $621 are owed
by Byte for three days, June 28 – 30.
34. The note
payable relating to the June 2, and 10 transactions 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.
[IMPORTANT
NOTE: The original note on the
computer equipment purchased on June 2 was $124,000. On June 10, eight days later, $23,750 was
repaid. Interest expense must be
calculated on
the $124,000 for eight days. In
addition, interest expense on the $100,250 balance of the loan ($124,000 less
$23,750 = $100,250) must be calculated for the 20 days remaining in the month
of June.]
35. Income
taxes are to be computed at the rate of 25 percent of net income before
taxes.
[IMPORTANT
NOTE: Since the income taxes are a
percent of the net income you will want to prepare the Income Statements
through the Net Income Before Tax line.
The worksheet contains all of the accounts and their balances which
you can then transfer to the appropriate financial statement.]
Closing
Entries
36. Close the
revenue accounts.
37. Close the
expense accounts.
38. Close the
income summary account.
39. Close the
dividends account.

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