*(h) Date Account Titles and Explanation Debit Credit July 31 (To close revenue
ID: 2582214 • Letter: #
Question
*(h)
Date
Account Titles and Explanation
Debit
Credit
July 31
(To close revenue account)
July 31
(To close expense accounts)
July 31
(To close net income to retained earnings)
At June 30, 2017, 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 2017, 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 2017) 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.
Adjustment data:
1. Adjustment of prepaid insurance. 2. Adjustment of prepaid rent. 3. Supplies used, $950. 4. Equipment depreciation, $375 per month. 5. Accrual of interest on note payable. 6. Salaries for the second half of July, $8,400, to be paid on August 1. 7. Estimated utilities expense for July, $610 (invoice will be received in August). 8. Income tax for July, $910, will be paid in August.
*(h)
Journalize and post closing entries and complete the closing process. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. For accounts that have zero ending balance, the entry should be the balance date and zero for the amount.)Date
Account Titles and Explanation
Debit
Credit
July 31
(To close revenue account)
July 31
(To close expense accounts)
July 31
(To close net income to retained earnings)
Cash July 1 Bal. 3,970 July 1 2,800 July 2 38,000 July 3 3,000 July 10 910 July 3 6,000 July 16 9,100 July 6 2,900 July 27 11,400 July 14 300 July 18 8,400 July 31 Bal. 39,980 Accounts Receivable July 1 Bal. 910 July 10 910 July 20 21,300 July 27 11,400 July 31 Bal. 9,900 Prepaid Insurance July 3 3,000 July 31 250 July 31 Bal. 2,750 Supplies July 1 Bal. 520 July 31 950 July 6 2,900 July 31 Bal. 2,470 Prepaid Rent July 3 6,000 July 31 3,000 July 31 Bal. 3,000 Equipment July 1 18,000 July 31 Bal. 18,000 Accumulated Depreciation—Equipment July 31 375 July 31 Bal. 375 Accounts Payable July 14 300 July 1 Bal 300 July 20 1,700 July 31 610 July 31 Bal. 2,310 Interest Payable July 31 76 July 31 Bal. 76 Salaries and Wages Payable July 31 8,400 July 31 Bal. 8,400 Income Taxes Payable July 31 910 July 31 Bal. 910 Unearned Service Revenue July 13 850 July 1 Bal. 850 July 23 7,600 July 16 9,100 July 31 Bal. 1,500 Notes Payable July 1 15,200 July 31 Bal. 15,200 Common Stock July 1 bal. 2,700 July 2 38,000 July 31 Bal. 40,700 Retained Earnings July 1 Bal. 1,550 Service Revenue July 13 850 July 20 21,300 July 23 7,600 Salaries and Wages Expense July 18 8,400 July 31 8,400 Rent Expense July 31 3,000 Advertising Expense July 20 1,700 Supplies Expense July 31 950 Utilities Expense July 31 610 Depreciation Expense July 31 375 Insurance Expense July 31 250 Interest Expense July 31 76 Income Tax Expense July 31 910 Income SummaryExplanation / Answer
Journal Entry Date Particulars Dr. Amt. Cr. Amt. 31-Jul Service Revenue Dr. 29,750 To Income Summary 29,750 (To close revenue account) 31-Jul Income Summary Dr. 24,671 To Salaries & Wages Expenses 16,800 To Rent Expenses 3,000 To Advertising Expenses 1,700 To Supplies Expenses 950 To Utilities Expenses 610 To Depreciation Expenses 375 To Insurance Expenses 250 To Interest Expenses 76 To Income Tax Expense 910 (To close expense accounts) 31-Jul Income Summary Dr. 5,079 To Retained Earnings 5,079 (To close net income to retained earnings)
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