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Byte of Accounting

JERMAINE WILLIAMS 5990

Description of transaction

01.
June 1: Hudson Bloom invested $139,825.00 cash and computer equipment with a fair market value of $38,250.00 in his new business, Byte of Accounting.

02.
June 1: Check # 5000 was used to purchased office equipment costing $575.00 from Office Express. The invoice number was 87417.

03.
June 1: Check # 5001 was used to purchased computer equipment costing $11,000.00 from JERMAINE WILLIAMS. The invoice number was 20117.

04.
June 2: Check # 5002 was used to make a down payment of $27,000.00 on additional computer equipment that was purchased from Royce Computers, invoice number 76542. The full price of the computer was $135,000.00. A five-year note was executed by Byte for the balance.

05.
June 4: Additional office equipment costing $700.00 was purchased on credit from Discount Computer Corporation. The invoice number was 98432.

06.
June 8: Unsatisfactory office equipment costing $140.00 from invoice number 98432 was returned to Discount Computer for credit to be applied against the outstanding balance owed by Byte.

07.
June 10: Check # 5003 was used to make a $20,750.00 payment reducing the prinicpal owed on the June 2 purchase of computer equipment from Royce Computers.

08.
June 14: Check # 5004 was used to purchase a one-year insurance policy covering its computer equipment for $4,968.00 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 $8,250.00 was received for services performed for Pitman Pictures.

10.
June 16: Byte purchased a building and the land it is on for $149,000.00 to house its repair facilities and to store computer equipment. The lot on which the building is located is valued at $24,000.00. The balance of the cost is to be allocated to the building. Check # 5005 was used to make the down payment of $14,900.00. A thirty year mortgage with an inital payement due on August 1st, was established for the balance.

11.
June 17: Check # 5006 for $4,800.00 was paid for rent of the office space for June, July and August.

12.
June 17: Received invoice number 26354 in the amount of $350.00 from the local newspaper for advertising.

13.
June 21: Billed various miscellaneous local customers $4,900.00 for consulting services performed.

14.
June 21: Check # 5008 was used to purchase a fax machine for the office from Office Machines Express for $825.00. The invoice number was 975-328.

15.
June 21: Accounts payable in the amount of $560.00 were paid with Check # 5007.

16.
June 22: Check # 5010 was used to pay the advertising bill that was received on June 17.

17.
June 22: Received a bill for $1,140.00 from Computer Parts and Repair Co. for repairs to the computer equipment. The invoice number was 43254.

18.
June 22: Check # 5009 was used to pay salaries of $885.00 to equipment operators for the week ending June 18. Ignore payroll taxes.

19.
June 23: Cash in the amount of $3,925.00 was received on billings.

20.
June 23: Purchased office supplies for $555.00 from Staples on account. The invoice number was 65498.

21.
June 28: Billed $5,700.00 to miscellaneous customers for services performed to June 25.

22.
June 29: Cash in the amount of $5,400.00 was received for billings.

23.
June 29: Paid the bill received on June 22, from Computer Parts and Repairs Co with Check # 5011.

24.
June 29: Check # 5012 was used to pay salaries of $885.00 to equipment operators for the week ending June 25. Ignore payroll taxes.

25.
June 30: Received a bill for the amount of $890.00 from O & G Oil and Gas Co. The invoice number was 784537.

26.
June 30: Check # 5013 was used to pay for airline tickets of $1,900.00 to send the kids to Grandma Ellen for the July 4th holiday.

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 7.75 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.
Record a journal entry to reflect that one half month’s insurance has expired.

31.
A review of Byte’s job worksheets show that there are unbilled revenues in the amount of $9,250 for the period of June 28-30.

32.
The expense for depreciation follows:

Building – $245.00

Computer Equipment – $3,050.00

Office Equipment – $25.00

33.
A review of the payroll records show that unpaid salaries in the amount of $531.00 are owed by Byte for three days, June 28 – 30. Ignore payroll taxes.

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 $108,000. On June 10, eight days later, $20,750 was repaid. Interest expense must be

34.
The note payable to Royce Computers (transactions 04 and 07) is a five-year note, with interest at the rate of 12 percent annually. Interest expense for the period is $869.67.

Closing Entries

35.
Close the revenue accounts.

36.
Close the expense accounts.

37.
Close the income summary account.

38.
Close the withdrawals account.