Hudson Bloom invested $139,850.00 cash and computer equipment with a fair market

Question

Hudson Bloom invested $139,850.00 cash and computer equipment with a fair market value of $37,000 in his new business, Byte of une 1: Check 3000 was used to purchased computer equipment costing $13,00000 from Autumn Daniels. T invoice number was 20117 June 1: Check e 5001 was used to purchased office equipment costing $1,100.00 from Office Express. The invoice number was 874117 June 2: Check # 3002 was used to make a down payment of $29,000.00 oe additional computer equipment that five-ycar note was executed by Byte for the balance une 4: Additional office equipment costing 3500.00 was purchased on credit from Discount Compute 04. was purchased from Royce Computers, invoice number 76542. The full price of the compuer was $145,000.00. 05 Corn·tion The invoice number was 98432 June 8: Unsatisfactory office equipment costing $100.00 from invoice number 98432 was returned to Discount the June 10: Check e 3003 was used to make a $22,250.00 payment redacing the prinicpal owed on the June 2 of from June 14: Check $004 was used to purchase a one-year insurance policy covering its computer equipment for 5,808.00 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 $6,750.00 was received for services performed for Picman Pictures June 16: Byte purchased a building and the land it is on for $137000.00 to house its rapair facilities and to store computer equipment. The lot on which the building is located is valued at $22,000.00. The balance of the cost is to be allocated to the building. Check e 3005 was used to make the down payment of $13,700.00 A thinty year mortgage with an inital payement due on Aupust 1st, was established for the balance 12 June 17: Received invoice number 26354 in the amount of $325.00 from the local newspaper for advertising June 21: $700 00? Check 3008 was used to purchase a fax machine for the office from Office Machines Express for The moce number was 975-328 15. June 21: Billed various miscellaneous local customers $4,200.00 for consulting services performed June 22: Check 8 $009 was used to pay salaries of 5935.00 to equipment operators for the week ending June 18 16 June 22: Received a ball for $1,140.00 from Computer Parts and Repair Co. for repairs to the computer equipment The invoice number was 43254 18 June 22 Chesk010ed to pay th esing bill hts rececived on June 12 19 June 23: Purchased office supplies for $705,00 from Staples on account. The invoice number was 65498 22 June 29: Paid the bill received on June 22, from Computer Parts and Repairs Co uch Check # 5011 2 June 29: Check e s012 was used to pay salaries of $935,00 to equipment operators for the week ending June 25

Explanation / Answer

32 Depreciation for Computer equipment: Total value of computer equipment purchased: Jun-01 37000 Jun-01 15000 Jun-02 145000 Total 197000 Useful life=5 years Scrap value=0. Depreciation under Stright-line method=(Original cost-Scrap value)/Useful life=(197000-0)/5=$ 39400 For one month=39400/12=3283.33 Transaction Date Account Name Description Debit Credit 32 Jun-30 5110 Depreciation expense Depreciation for one month 3607.54 32 Jun-30 1412 Accum.Depr-Building Depreciation for one month 306.35 32 Jun-30 1312 Accum.Depr-Computer equipment Depreciation for one month 3283.33 32 Jun-30 1212 Accum.Depr-office equipment Depreciation for one month 17.86 36 Transaction Date Account Name Description Debit Credit 36 Jun-30 3400 Income summary Closing expense accounts 12443.87 36 Jun-30 5020 Salary expense Closing expense accounts 2431 36 Jun-30 5030 Advertising expense Closing expense accounts 325 36 Jun-30 5040 Repairs & Maint.Expenses Closing expense accounts 1140 36 Jun-30 5010 Rent expenses Closing expense accounts 2100 36 Jun-30 5110 Depreciation expense Closing expense accounts 3607.54 36 Jun-30 5090 Interest expense Closing expense accounts 1345.33 36 Jun-30 5080 Supplies expenses Closing expense accounts 413 36 Jun-30 5050 Oil & Gas expenses Closing expense accounts 840 36 Jun-30 5100 Insurance expense Closing expense accounts 242 37 Transaction Date Account Name Description Debit Credit 37 Jun-30 3400 Income summary Closing income summary 9771.13 (22215-12443.87) 37 Jun-30 3100 Hudson Bloom,Capital Closing income summary 9771.13 38 Transaction Date Account Name Description Debit Credit 38 Jun-30 3100 Hudson Bloom,Capital Closing withdrawal accounts 4400 (2200+2200) 38 Jun-30 3300 Hudson Bloom,Withdrawals Closing withdrawal accounts 4400

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