70.2K

Verified Solution

Link Copied!

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 $14,400 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 $33,600; received $32,928 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 $6,800 per month; received the entire fee of $81,600 in advance.
	1	Purchased office equipment for $20,400 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 $2,160 salvage value. The equipment will be depreciated using the straight-line method.
	1	Purchased a one-year insurance policy and issued Check 102 for $1,716 to pay the entire premium.
	3	Purchased office furniture for $23,200 from Furniture Warehouse; issued Check 103 for $13,400 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 $1,970 with Check 104. Assume $880 of supplies are on hand July 31, 2019.

Required:

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.

Record the adjusting journal entries that must be made on July 31, 2019.

Analyze: What balance should be reflected in Unearned Accounting Fees at July 31, 2019?

Answer & Explanation Solved by verified expert

See Answer