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Byte of Accounting, Inc.
De`Antae McGhee 7834
Transaction Description
of transaction
01. June 1: Byte of Accounting, Inc. acquired $70,200
in cash from Lauryn and issued 2,600 shares of its common stock.
02. June 1: Byte of Accounting, Inc. issued 2,610
shares of its common stock to De`Antae McGhee after $30,240 in cash and
computer equipment with a fair market value of $40,230 were received.
03. June 1: Byte of Accounting, Inc. issued 1,959
shares of its common stock after acquiring
from Courtney $36,450 in cash, computer equipment with a fair market
value of $15,660 and office equipment with a fair value of $783.
04. June 2: A down payment of $33,000 in cash was made
on additional computer equipment that was purchased for $165,000. A five-year note was executed by Byte for
the balance.
05. June 4: Additional office equipment costing $300
was purchased on credit from Discount Computer Corporation.
06. June 8: Unsatisfactory office equipment costing
$60 was returned to Discount Computer
for credit to be applied against the outstanding balance owed by Byte.
07. June 10: Byte paid $25,250 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 $5,640 in cash. The effective
date of the policy was June 16.
09. June 16: A check in the amount of $6,500 was received for consulting revenue.
10. June 16: Byte purchased a building and the land it
is on for $137,000, to house its repair facilities and to store computer
equipment. The lot on which the
building is located is valued at $22,000. The balance of the cost is to be
allocated to the building. Byte made a
cash down payment of $13,700 and
executed a mortgage for the balance.
The mortgage is payable in eight equal annual installments beginning
July 1.
11. June 17: Cash of $7,200 was paid for rent for June,
July and August. Put the total amount
into the Prepaid Rent account.
12. June 17: Received a bill of $475 from the local
newspaper for advertising.
13. June 21: Accounts payable in the amount of $240 were
paid.
14. June 21: A fax machine for the office was purchased
for $850 cash.
15. June 21: Billed
various miscellaneous local customers $4,100 for consulting services
performed.
16. June 22: Paid salaries of $1,010 to equipment
operators for the week ending June 18.
17. June 22: Received a bill for $1,115 from Computer
Parts and Repair Co. for repairs to the computer equipment.
18. June 22: Paid the advertising bill that was received
on June 17.
19. June 23: Purchased office supplies for $555 on
credit. Record the purchase as an
increase to the assets.
20. June 23: Cash in the amount of $3,285 was received
on billings.
21. June 28: Billed $5,700 to miscellaneous customers
for services performed to June 25.
22. June 29: Paid the bill received on June 22, from
Computer Parts and Repairs Co.
23. June 29: Cash in the amount of $5,400 was received
for billings.
24. June 29: Paid salaries of $1,010 to equipment
operators for the week ending June 25.
25. June 30: Received a bill for the amount of $990 from
O & G Oil and Gas Co.
26. June 30: Paid a cash dividend of $0.19 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, July and August. Expense the amount associated with one
month’s rent.
28. A physical
inventory showed that only $225.00 worth of office supplies remained on hand
as of June 30.
29. The annual interest rate on the mortgage payable was
7.25 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 $8,750 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 $7,000. The
office equipment has a scrap value of $500.
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 $606.00 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 $132,000. On June 10, eight days later, $25,250 was
repaid. Interest expense must be
calculated on
the $132,000 for eight days. In
addition, interest expense on the $106,750 balance of the loan ($132,000 less
$25,250 = $106,750) 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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A Byte of Accounting, Inc.
General Journal

Transaction Date Account Name Description Debit Credit Total Balance
01 Jun 01 1110 Cash Lauryn Investment 70,200.00 70200 0
01 Jun 01 3100 Capital Stock Lauryn
Investment		 70,200.00 (70200) 0
0 0
0 0
02 Jun 01 1110 Cash De’Antae’s common
stock		 30,240.00 30240 0
02 Jun 01 1311 Computer Equip. De’Antae’s common
stock		 40,230.00 40230 0
02 Jun 01 3100 Capital Stock De’Antae’s common
stock		 70,470.00 (70470) 0
0 0
03 Jun 01 1110 Cash Courtney’s
Investment		 36,450.00 36450 0
03 Jun 01 1311 Computer Equip. Courtney’s
Investment		 15,660.00 15660 0
03 Jun 01 1211 Office Equip. Courtney’s
Investment		 783.00 783 0
03 Jun 01 3100 Capital Stock Courtney’s
Investment		 52,893.00 (52893) 0
04 Jun 02 1311 Computer Equip. Computer down
payment		 198,000.00 ###### 0
04 Jun 02 2202 Notes Payable Computer down
payment		 165,000.00 ###### 0
04 Jun 02 1110 Cash Computer down
payment		 33,000.00 (33000) 0
0 0
05 Jun 04 1211 Office Equip. Office equipment on
credit		 300.00 300 0
05 Jun 04 2101 Accounts Payable Office equipment on
credit		 300.00 (300) 0
0 0
0 0
06 Jun 08 2101 Accounts Payable Return office
equipment		 60.00 60 0
06 Jun 08 1211 Office Equip. Return office
equipment		 60.00 (60) 0
0 0
0 0
07 Jun 10 2202 Notes Payable Pay on computer 25,250.00 25250 0
07 Jun 10 1110 Cash Pay on computer 25,250.00 (25250) 0
0 0
0 0
08 Jun 14 1130 Prepaid Insurance Pay for
insurance		 5,640.00 5640 0
08 Jun 14 1110 Cash Pay for
insurance		 5,640.00 (5640) 0
0 0
0 0
09 Jun 16 1110 Cash Consulting
revenue		 6,500.00 6500 0
09 Jun 16 4100 Computer &
Consulting Revenue		 Consulting
revenue		 6,500.00 (6500) 0
0 0
0 0
10 Jun 16 1411 Building Cost Building and land for
house		 137,000.00 ###### 0
10 Jun 16 1510 Land Building and land for
house		 22,000.00 22000 0
10 Jun 16 1110 Cash Building and land for
house		 13,700.00 (13700) 0
10 Jun 16 2201 Mortgage Payable Building and land for
house		 145,300.00 ###### 0
11 Jun 17 1140 Prepaid Rent Payment for rent 7,200.00 7200 0
11 Jun 17 1110 Cash Payment for rent 7,200.00 (7200) 0
0 0
0 0
12 Jun 17 5030 Advertising Expense Advertising 475.00 475 0
12 Jun 17 2101 Accounts Payable Advertising 475.00 (475) 0
0 0
0 0
13 Jun 21 2101 Accounts Payable Payment 240.00 240 0
13 Jun 21 1110 Cash Payment 240.00 (240) 0
0 0
0 0
14 Jun 21 1211 Office Equip. Fax machine 850.00 850 0
14 Jun 21 1110 Cash Fax machine 850.00 (850) 0
0 0
0 0
15 Jun 21 1120 Accounts Receivable Consulting
service		 4,100.00 4100 0
15 Jun 21 4100 Computer &
Consulting Revenue		 Consulting
service		 4,100.00 (4100) 0
0 0
0 0
16 Jun 22 5020 Salary Expense Paid salary 1,010.00 1010 0
16 Jun 22 1110 Cash Paid salary 1,010.00 (1010) 0
0 0
0 0
17 Jun 22 5040 Repairs & Maint.
Expense		 Repair expense 1,115.00 1115 0
17 Jun 22 2101 Accounts Payable Repair expense 1,115.00 (1115) 0
0 0
0 0
18 Jun 22 2101 Accounts Payable Advertising bill 475.00 475 0
18 Jun 22 1110 Cash Advertising bill 475.00 (475) 0
0 0
0 0
19 Jun 23 1150 Office Supplies Supplies 555.00 555 0
19 Jun 23 2101 Accounts Payable Supplies 555.00 (555) 0
0 0
0 0
20 Jun 23 1110 Cash Cash for bill 3,285.00 3285 0
20 Jun 23 1120 Accounts Receivable Cash for bill 3,285.00 (3285) 0
0 0
0 0
21 Jun 28 1120 Accounts Receivable Service 5,700.00 5700 0
21 Jun 28 4100 Computer &
Consulting Revenue		 Service 5,700.00 (5700) 0
0 0
0 0