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On July 1, 2019, Tim Stein established his own accounting practice. Selected transactions for the first few days of July follow DATE TRANSACTIONS July 1 Signed a lease for an office and issued Check 101 for $13,500 to pay the rent in advance for six months 1 Borrowed money from Second National Bank by issuing a four-month, 6 percent note for $28,800; received $28,224 because the bank deducted the interest in advance. 1 Signed an agreement with Carter Corp. to provide accounting and tax services for one year at $6,200 per month; received the entire fee of $74,400 in advance. 1 Purchased office equipment for $14,000 from Office Outfitters; issued a two-month, 9 percent note in payment. The equipment is estimated to have a useful life of four years and a $1,520 salvage value. The equipment will be depreciated using the straight-line method. 1 Purchased a one-year insurance policy and issued Check 102 for $1,644 to pay the entire premium 3 Purchased office furniture for $21,040 from Furniture Warehouse; issued Check 103 for $15,440 and agreed to pay the balance in 60 days. The equipment has an estimated useful life of six years and a $1,600 salvage value. The office furniture will be depreciated using the straight-line method. 5 Purchased office supplies for $1,850 with Check 104. Assume $820 of supplies are on hand July 31, 2019 Required: 1. Record the transactions in the general journal. Assume that the firm initially records prepaid expenses as assets and unearned income as a liability for the year 2019 2. Record the adjusting journal entries that must be made on July 31, 2019

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