TOR FULL SCREEN PRINTER VERSTON BACK $8,400 $8,400 e company underwent a major e
ID: 2585626 • Letter: T
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TOR FULL SCREEN PRINTER VERSTON BACK $8,400 $8,400 e company underwent a major expansion in July. New staff was hired and more financing was obtained. Swifty conducted the following transactions during July 2017, d adjusts its accounts monthly. ly 1 Purchased equipment, paying $5,200 cash and signing a 2-year note payable for $23,600. The equipment has a 4-year useful life. The note has a 6% interest 2 3 3 6 rate which is payable on the first day of each following month. Issued 23,600 shares of common stock for $59,000 cash. Paid $4,200 cash for a 12-month insurance policy effective July 1. Paid the first 2 (July and August 2017) months' rent for an annual lease of office space for $4,700 per month. Paid $4,500 for supplies. Visited client offices and agreed on the terms of a consulting project. Swifty will bill the client, Connor Productions, on the 20th of each month for services performed. 10 Collected $1,420 cash on account from Milani Brothers. This client was billed in June when Swifty performed the service. 13 Performed services for Fitzgerald Enterprises. This client paid $1,320 in advance last month. All services relating to this payment are now completed. 14 Paid $470 cash for a utility bill. This related to June utilities that were accrued at the end of June 16 Met with a new 18 Paid semi-monthly salaries for $13,000. 20 Performed services worth $33,000 on account and billed customers. client, Thunder Bay Technologies. Received s14,200 cash in advance for future services to be performed. 20 Received a bill for $2,600 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 $11,800 of revenue from the cash advance received July 16. 27 Received $17,700 cash from customers billed on July 20. djustment data: Adjustment of prepaid insurance Version 4 inetmanrf nranaid rant 1 2000-2017 John Wiley &Sons;, Inc. All Rights Reserved. A Division of John Wiley & Sons, IncExplanation / Answer
1) Interest expense for the month of july = Note payable amount*interest rate*1/12
= $23,600*6%*1/12 = $118
(Interest will be accrue for one month of july on July 31 and interest rate of 6% is assumed to be for one year)
Therefore Interest Payable and Interest expense balance will be $118.
2) Prepaid insurance ledger closing balance will be = $4,200-$350 = $3,850
$4,200 is for 12 months starting from July, on July 31, the july's expense for insurance is $350 and the balance $3,850 will be prepaid insurance for next 11 months.
3) The supplies ledger closing balance will be $3,810 ($810+$4,500-$1,500).
4) The Accounts Payable Ledger is shown as follows (Amount in $)
Date Debit Date Credit July 14 470 July 1, Bal. 470 July 20 2,600 July 31 940 July 31, Bal. 3,540Related Questions
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