accounting cycle problem 1

Financial Accounting. Details are in the file.

At June 30, 2022, the end of its most recent fiscal year, Blue Computer Consultants’ post-closing trial balance was as follows:

Debit Credit
Cash $3,970

Accounts receivable

910

Supplies

520

Accounts payable

$300

Unearned service revenue

850

Common stock

2,700

Retained earnings

1,550
$5,400 $5,400

The company underwent a major expansion in July. New staff was hired and more financing was obtained. Blue conducted the following transactions during July 2022, and adjusts its accounts monthly.

July 1 Purchased equipment, paying $2,800 cash and signing a 2-year note payable for $15,200. 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 15,200 shares of common stock for $38,000 cash.
3 Paid $3,000 cash for a 12-month insurance policy effective July 1.
3 Paid the first 2 (July and August 2022) months’ rent for an annual lease of office space for $3,000 per month.
6 Paid $2,900 for supplies.
9 Visited client offices and agreed on the terms of a consulting project. Blue will bill the client, Connor Productions, on the 20th of each month for services performed.
10 Collected $910 cash on account from Milani Brothers. This client was billed in June when Blue performed the service.
13 Performed services for Fitzgerald Enterprises. This client paid $850 in advance last month. All services relating to this payment are now completed.
14 Paid $300 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 $9,100 cash in advance for future services to be performed.
18 Paid semi-monthly salaries for $8,400.
20 Performed services worth $21,300 on account and billed customers.
20 Received a bill for $1,700 for advertising services received during July. The amount is not due until August 15.
23 Performed the first phase of the project for Thunder Bay Technologies. Recognized $7,600 of revenue from the cash advance received July 16.
27 Received $11,400 cash from customers billed on July 20.

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