Question

At June 30, 2017, the end of its most recent fiscal year, Green River Computer Consultants' post-closing trial balance was as follows: Debit Credit Cash $5,230 Accounts receivable 1,200 Supplies 690 Accounts payable $400 Unearned service revenue 1,120 Common stock 3,600 Retained earnings 2,000 $7,120 $7,120 The company underwent a major expansion in July. New staff was hired and more financing was obtained. Green River conducted the following transactions during July 2017, and adjusts its accounts monthly. July 1 Purchased equipment, paying $4,000 cash and signing a 2-year note payable for $20,000. The equipment has a 4-year useful life. The note has a 6% interest rate which is payable on the first day of each following month. 2 Issued 20,000 shares of common stock for $50,000 cash. 3 Paid $3,600 cash for a 12-month insurance policy effective July 1. 3 Paid the first 2 (July and August 2017) months' rent for an annual lease of office space for $4,000 per month. 6 Paid $3,800 for supplies. Visited client offices and agreed on the terms of a consulting project. Green River will bill the client, Connor Productions, on the 20th of each month for services performed. Collected $1,200 cash on account from Milani Brothers. This client was billed in June when Green River performed the service. Performed services for Fitzgerald Enterprises. This client paid $1,120 in advance last month. All services relating to this payment are now completed. 14 Paid $400 cash for a utility bill. This related to June utilities that were accrued at the end of June. 16 Met with a new client, Thunder Bay Technologies. Received $12,000 cash in advance for future services to be performed.

Answer 1

Solution

Green River Computer Consultants

Journal Entries

Date	Account Titles and Explanation	Debit	Credit
July1, 2017	Equipment	$24,000
	Cash		$4,000
	Notes Payable		$20,000
	(To record equipment purchase, partly cash)
Jul-02	Cash	$50,000
	Common Stock		$50,000
	(To record issue of 20,000 shares)
Jul-03	Prepaid Insurance	$3,600
	Cash		$3,600
	(To record payment for 12- month insurance policy0
Jul-03	Prepaid Rent	$8,000
	Cash		$8,000
	(To record prepaid rent for July and August)
Jul-06	Supplies	$3,800
	Cash		$3,800
	(To record purchase of supplies)
Jul-09	No Entry
Jul-10	Cash	$1,200
	Accounts Receivable		$1,200
	(To record cash collected)
Jul-13	Unearned Service Revenue	$1,120
	Service Revenue		$1,120
	(To record services performed for advances received)
Jul-14	Utilities Payable	$400
	Cash		$400
	(To record June Utilities paid)
Jul-16	Cash	$12,000
	Unearned Service Revenue		$12,000
	(To record customer advances received)
Jul-18	Salaries Expense	$11,000
	Cash		$11,000
	(To record semi-monthly salaries paid)
Jul-20	Accounts Receivable	$28,000
	Service Revenue		$28,000
	(To record services performed)
Jul-20	Advertising Expenses	$2,200
	Advertising Payable		$2,200
	(To record accrued advertising expenses)
Jul-23	Unearned Service Revenue	$10,000
	Service Revenue		$10,000
	(To record earned portion of unearned service revenue)
Jul-27	Cash	$15,000
	Accounts Receivable		$15,000
	(To record cash collected)
Adjusting Entries:
July 31, 2017	Insurance Expense	$300
	Prepaid Insurance		$300
	(To record expired portion of prepaid insurance; 3,600 x 1/12 = $300)
July 31, 2017	Rent Expense	$4,000
	Prepaid Rent		$4,000
	(To record rent expense for July)
July 31, 2017	Supplies Expense	$1,250
	Supplies		$1,250
	(To record cost of supplies used)
July 31, 2017	Depreciation Expense - Equipment	$500
	Accumulated Depreciation - Equipment		$500
	(To record depreciation expense)
July 31, 2017	Interest Expense	$100
	Interest Payable		$100
	(to record interest expense on note payable; 20,000 x 6% x 1/12 = $100)
July 31, 2017	Salaries Expense	$11,000
	Salaries Payable		$11,000
	(To record accrued salaries)
July 31, 2017	Utilities Expense	$800
	Utilities Payable		$800
	(To record accrued utilities)
July 31, 2017	Income Tax Expense	$1,200
	Income Tax Payable		$1,200
	(To record taxes payable)