Question;Byte of;Accounting, Inc.;Ahmad;Sartawi 0522;Description of transaction;June;1: Byte of Accounting, Inc. acquired;$52,000 in cash from Lauryn and issued 2,600 shares of its common stock.;June;1: Byte of Accounting, Inc. issued;2,600 shares of its common stock to Ahmad Sartawi after $22,000 in cash and;computer equipment with a fair market value of $30,000 were received.;June;1: Byte of Accounting, Inc. issued;2,148 shares of its common stock after acquiring from Courtney $33,000 in cash, computer;equipment with a fair market value of $9,200 and office equipment with a fair;value of $760.;June;2: A down payment of $34,000 in cash;was made on additional computer equipment that was purchased for;$170,000. A five-year note was;executed by Byte for the balance.;June;4: Additional office equipment costing;$500 was purchased on credit from Discount Computer Corporation.;June;8: Unsatisfactory office equipment;costing $100 was returned to Discount;Computer for credit to be applied against the outstanding balance owed by;Byte.;June;10: Byte paid $26,000 on the balance;it owed on the June 2 purchase of computer equipment.;June 14;A one-year insurance policy covering its computer equipment was purchased by;Byte for $5,304 in cash. The effective;date of the policy was June 16.;June;16: A check in the amount of $7,250 was received for consulting revenue.;June;16: Byte purchased a building and the;land it is on for $107,000, to house its repair facilities and to store;computer equipment. The lot on which;the building is located is valued at $17,000. The balance of the cost is to;be allocated to the building. Byte;made a cash down payment of $10,700;and executed a mortgage for the balance. The mortgage is payable in eight equal;annual installments beginning July 1.;June;17: Cash of $5,400 was paid for rent;for June, July and August. Put the;total amount into the Prepaid Rent account.;June;17: Received a bill of $425 from the;local newspaper for advertising.;June;21: Accounts payable in the amount of;$400 were paid.;June;21: A fax machine for the office was;purchased for $675 cash.;June 21;Billed various miscellaneous local customers $4,400 for consulting services;performed.;June;22: Paid salaries of $985 to equipment;operators for the week ending June 18.;June;22: Received a bill for $1,315 from;Computer Parts and Repair Co. for repairs to the computer equipment.;June;22: Paid the advertising bill that was;received on June 17.;June;23: Purchased office supplies for $580;on credit. Record the purchase as an;increase to the assets.;June;23: Cash in the amount of $3,525 was;received on billings.;June;28: Billed $5,700 to miscellaneous;customers for services performed to June 25.;June;29: Paid the bill received on June 22;from Computer Parts and Repairs Co.;June;29: Cash in the amount of $5,400 was;received for billings.;June;29: Paid salaries of $985 to equipment;operators for the week ending June 25.;June;30: Received a bill for the amount of;$940 from O & G Oil and Gas Co.;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.;The rent;payment made on June 17 was for June, July and August. Expense the amount associated with one;month's rent.;A;physical inventory showed that only $236.00 worth of office supplies remained;on hand as of June 30.;The;annual interest rate on the mortgage;payable was 8.50 percent. Interest;expense for one-half month should be computed because the building and land;were purchased and the liability incurred on June 16.;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.;A review of Byte?s job worksheets show that;there are unbilled revenues in the amount of $5,500 for the period of June;28-30.;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 $400.;The computer equipment has no scrap value. Calculate the depreciation for one month.;A review;of the payroll records show that unpaid salaries in the amount of $591.00 are;owed by Byte for three days, June 28 -;30.;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 $136,000. On June 10, eight days later, $26,000 was;repaid. Interest expense must be;calculated;on the $136,000 for eight days. In;addition, interest expense on the $110,000 balance of the loan ($136,000 less;$26,000 = $110,000) must be calculated for the 20 days remaining in the month;of June.];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;Close;the revenue accounts.;Close;the expense accounts.;Close;the income summary account.;Close;the dividends account.
Paper#39668 | Written in 18-Jul-2015Price : $63