Accounting Cycle Problem
Question Description
Financial Accounting. Details are in the file.
At June 30, 2022, the end of its most recent fiscal year, Blue Computer Consultants’ post-closing trial balance was as follows:
Debit | Credit | |||
---|---|---|---|---|
Cash | $3,970 | |||
Accounts receivable |
910 | |||
Supplies |
520 | |||
Accounts payable |
$300 | |||
Unearned service revenue |
850 | |||
Common stock |
2,700 | |||
Retained earnings |
1,550 | |||
$5,400 | $5,400 |
The company underwent a major expansion in July. New staff was hired and more financing was obtained. Blue conducted the following transactions during July 2022, and adjusts its accounts monthly.
July | 1 | Purchased equipment, paying $2,800 cash and signing a 2-year note payable for $15,200. The equipment has a 4-year useful life. The note has a 6% interest rate which is payable on the first day of each following month. | |
2 | Issued 15,200 shares of common stock for $38,000 cash. | ||
3 | Paid $3,000 cash for a 12-month insurance policy effective July 1. | ||
3 | Paid the first 2 (July and August 2022) months’ rent for an annual lease of office space for $3,000 per month. | ||
6 | Paid $2,900 for supplies. | ||
9 | Visited client offices and agreed on the terms of a consulting project. Blue will bill the client, Connor Productions, on the 20th of each month for services performed. | ||
10 | Collected $910 cash on account from Milani Brothers. This client was billed in June when Blue performed the service. | ||
13 | Performed services for Fitzgerald Enterprises. This client paid $850 in advance last month. All services relating to this payment are now completed. | ||
14 | Paid $300 cash for a utility bill. This related to June utilities that were accrued at the end of June. | ||
16 | Met with a new client, Thunder Bay Technologies. Received $9,100 cash in advance for future services to be performed. | ||
18 | Paid semi-monthly salaries for $8,400. | ||
20 | Performed services worth $21,300 on account and billed customers. | ||
20 | Received a bill for $1,700 for advertising services received during July. The amount is not due until August 15. | ||
23 | Performed the first phase of the project for Thunder Bay Technologies. Recognized $7,600 of revenue from the cash advance received July 16. | ||
27 | Received $11,400 cash from customers billed on July 20. |
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