Question

At June 30, 2017, the end of its most recent fiscal year, Sheffield Computer Consultants’ post-closing trial balance was as follows:

		Debit		Credit
Cash		$5,540
Accounts receivable		1,270
Supplies		730
Accounts payable				$420
Unearned service revenue				1,190
Common stock				3,800
Retained earnings				2,130
		$7,540		$7,540

The company underwent a major expansion in July. New staff was hired and more financing was obtained. Sheffield 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 $21,200. 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 21,200 shares of common stock for $53,000 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 $4,200 per month.
	6		Paid $4,000 for supplies.
	9		Visited client offices and agreed on the terms of a consulting project. Sheffield will bill the client, Connor Productions, on the 20th of each month for services performed.
	10		Collected $1,270 cash on account from Milani Brothers. This client was billed in June when Sheffield performed the service.
	13		Performed services for Fitzgerald Enterprises. This client paid $1,190 in advance last month. All services relating to this payment are now completed.
	14		Paid $420 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 $12,700 cash in advance for future services to be performed.
	18		Paid semi-monthly salaries for $11,700.
	20		Performed services worth $29,700 on account and billed customers.
	20		Received a bill for $2,300 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 $10,600 of revenue from the cash advance received July 16.
	27		Received $15,900 cash from customers billed on July 20.

Adjustment data:

1.		Adjustment of prepaid insurance.
2.		Adjustment of prepaid rent.
3.		Supplies used, $1,350.
4.		Equipment depreciation, $525 per month.
5.		Accrual of interest on note payable.
6.		Salaries for the second half of July, $11,700, to be paid on August 1.
7.		Estimated utilities expense for July, $850 (invoice will be received in August).
8.		Income tax for July, $1,270, will be paid in August.

The chart of accounts for Sheffield Computer Consultants contains the following accounts: Cash, Accounts Receivable, Supplies, Prepaid Insurance. Prepaid Rent, Equipment, Accumulated Depreciation—Equipment, Accounts Payable, Notes Payable, Interest Payable, Income Taxes Payable, Salaries and Wages Payable, Unearned Service Revenue, Common Stock, Retained Earnings, Dividends, Income Summary, Service Revenue, Supplies Expense, Depreciation Expense, Insurance Expense, Salaries and Wages Expense, Advertising Expense, Income Tax Expense, Interest Expense, Rent Expense, Supplies Expense, and Utilities Expense.

(d)

Prepare a trial balance at July 31.

SHEFFIELD COMPUTER CONSULTANTS Trial Balances choose the accounting period: For the Year Ended July 31, 2017,July 31, 2017, For the Month Ended July 31, 2017
	Debit	Credit
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	$enter a total for the debit column	$enter a total for the credit column

Answer 1

Unadjusted TB Debit Credit 56,290 13,800 4,730 3,600 8,400 25,200 Sheffield Computer Consultants Account Names Cash Accounts Receivable Supplies Prepaid Insurance Prepaid Rent Equipment Accumulated Depreciation Equipment Accounts Payable Interest Payable Salaries & wages Payable Income tax Payable Unearned Service Revenue Notes Payable Common Stock Retained Earnings Service Revenue Salaries & wages expense Rent expense Advertising expense Supplies expense Utilities expense Depreciation expense Insurance expense Interest expense Income tax expense Totals 2,300 Adjusted TB Debit Credit 56,290 13,800 3,380 3,300 4,200 25,200 525 3,150 106 11,700 1,270 2,100 21,200 56,800 2,130 41,490 23,400 4,200 2,300 1,350 Post Closing TB Debit Credit 56,290 13,800 3,380 3,300 4,200 25,200 525 3,150 106 11,700 1,270 2,100 21,200 56,800 9,319 2,100 21,200 56,800 2,130 41,490 11,700 2,300 850 525 300 106 1,270 140,471 126,020 126,020 140,471 106,170 106,170

Credit Calculation Sheffield Computer Consultants Journal entries No. Date Account Titles & Explanation 1-Jul Equipment Cash Notes Payable Debit 25,200 4,000 21,200 53,000 2-Jul Cash Common Stock 53,000 3-Jul Prepaid Insurance 3,600 Cash 3,600 8,400 -4,200*2 3-Jul Prepaid Rent Cash 8,400 4,000 6-Jul Supplies Cash 4,000 9-Jul No entry 1,270 10-Jul Cash Accounts Receivable 1,270 1,190 13-Jul Unearned Service Revenue Service Revenue 1,190 420 14-Jul Accounts Payable Cash 420 12,700 16-Jul Cash Unearned Service Revenue 12,700 11,700 18-Jul Salaries & wages expense Cash 11,700 29,700 20-Jul Accounts Receivable Service Revenue 29,700 2,300 20-Jul Advertising expense Accounts Payable 2,300 10,600 23-Jul Unearned Service Revenue Service Revenue 10,600 15,900 15,900 27-Jul Cash Accounts Receivable Adjusting entries 1 31-Jul Insurance expense Prepaid Insurance 300 =3,600/12 300 2 4,200 31-Jul Rent expense Prepaid Rent 4,200 1,350 31-Jul Supplies expense Supplies 1,350 4 525 31-Jul Depreciation expense Accumulated Depreciation Equipment 525 5 106 =21,200*6%*1/12 31-Jul Interest expense Interest Payable 106 6 11,700 31-Jul Salaries & Wages expense Salaries & Wages Payable 11,700 7 850 31-Jul Utilities expense Accounts Payable 850 1,270 1,270 8 31-Jul Income tax expense Income tax Payable Clsoing entries 1 31-Jul Service Revenue Income Summary 41,490 41,490 2 34,301 31-Jul Income Summary Salaries & wages expense Rent expense Advertising expense Supplies expense Utilities expense Depreciation expense Insurance expense Interest expense Income tax expense 23,400 4,200 2,300 1,350 850 525 300 106 1,270 3 7,189 '= 41490 - 34301 31-Jul Income Summary Retained Earnings 7,189

Sheffield Computer Consultants T Accounts Date Debit Date Credit Cash Op bal $ 5,540 1-Jul $ 4,000 2-Jul $53,000 3-Jul $ 3,600 10-Jul $ 1,270 3-Jul $ 8,400 16-Jul $ 12,700 6-Jul $ 4,000 27-Jul $ 15,900 14-Jul $ 420 18-Jul $ 11,700 Date Debit Date Credit Accounts Receivable Op bal $ 1,270 10-Jul $ 1,270 20-Jul $ 29,700 27-Jul $ 15,900 Date Debit Date Credit Supplies Op bal $ 730 6-Jul $ 4,000 31-Jul $ 1,350 Date Debit Date Credit Prepaid Insurance 3-Jul $ 3,600 31-Jul $ 300 July 31 Bal. $ 56,290 Prepaid Rent 3-Jul $ 8,400 31-Jul $ 4,200 July 31 Bal. $13,800 Equipment 1-Jul $ 25,200 July 31 Bal. $ 3,380 Accumulated Depreciation Equipment 31-Jul $ 525 July 31 Bal. $ 3,300 Accounts Payable 14-Jul $ 420 Op bal $ 420 20-Jul $ 2,300 31-Jul $ 850 July 31 Bal. $ 4,200 Interest Payable 31-Jul $ July 31 Bal. $ 25,200 Salaries & wages Payable 31-Jul $ 11,700 July 31 Bal. $ 525 Income taxes Payable 31-Jul $ 1,270 July 31 Bal. $ 3,150 Unearned Service Revenue 13-Jul $ 1,190 Op bal $ 1,190 23-Jul $ 10,600 16-Jul $ 12,700 106 July 31 Bal. $ 1,270 July 31 Bal. $ 2,100 July 31 Bal. $ 106 Notes Payable 1-Jul $ 21,200 July 31 Bal. $ 11,700 Common Stock Op bal $ 3,800 2-Jul $53,000 July 31 Bal. $ 21,200 Retained Earnings Op bal $ 2,130 31-Jul $ 7,189 July 31 Bal. $ 56,800 Income Summary 31-Jul $ 34,301 31-Jul $41,490 31-Jul $ 7,189 July 31 Bal. $ 9,319 Service revenue 13-Jul $ 1,190 20-Jul $ 29,700 31-Jul $41,490 23-Jul $ 10,600 July 31 Bal. $ . Salaries & wages expense 18-Jul $ 11,700 31-Jul $ 11,700 31-Jul $ 23,400 Rent expense 31-Jul $ 4,200 Advertsing expense 20-Jul $ 2,300 31-Jul $ 4,200 31-Jul $ 2,300 July 31 Bal. $ - Supplies expense 31-Jul $ 1,350 3 1-Jul $ 1,350 July 31 Bal. $ . Utilties expense 31-Jul $ 850 31-Jul $ July 31 Bal. $ . Depreciation expense 31-Jul $ 525 31-Jul $ July 31 Bal. $ . Insurance expense 31-Jul $ 300 31-Jul $ 850 525 300 July 31 Bal. $ - July 31 Bal. $ - July 31 Bal. $ - Interest expense 31-Jul $ 106 3 1-Jul $ July 31 Bal. $ - Income tax expense 31-Jul $ 1,270 31-Jul $ 1,270 106 July 31 Bal. $ - July 31 Bal. $ -