Question

GIVEN INFORMATION:

The Byte of Accounting Corporation (Byte) sells turn-key computer systems to midsize businesses on account. Byte was started by Lauryn on January 1 of last year when she was issued 2,200 shares of stock.

- Perpetual FIFO will be used for the Super Toners.

- The allowance method is used to account for bad debts.

Transaction 01: December 1: an investor made an investment in Byte by purchasing 2,700 shares of its common stock paying $72,900 in cash. The par value of the common stock was 1 $19.00 per share. Transaction 02: December 3: Byte purchased a Ricoh Color Copier for $5,300.00. The invoice number was 61298. Byte paid 10% in cash and signed a three-year note for the remaining balance. 2 Interest at a rate of 6% a year will be paid semiannually. 3 Transaction 03: December 3: Check #6001 for $2,400.00 was issued by Byte to pay for rent of the office space for December. 4 Transaction 04: December 3: Byte received 13 Super Toners for resale to customers at a cost of $20.00 per toner. The invoice number was 7249, and requires payment within 30 days. 5 Transaction 05: December 10: Byte sold 8 Super Toners to a customer on account for $57.00 each. The Sales order number was 12100. 6 Transaction 06: December 10: Byte records the cost of the 8 Super Toners sold using FIFO. The sales order number was 12100. 7 Transaction 07: December 11: Check #6002 was issued to pay salaries of $2,000.00 to equipment operators. (Ignore payroll taxes at this time.) Transaction 08: December 14: Check #6003 was issued to purchase a one-year insurance policy covering its computer equipment. The cost of the insurance is $6,360.00 and paid to Seth's 8 Insurance. The effective date of the policy was December 16 and the invoice number was 2387. 9 Transaction 09: December 15: Byte purchased $400.00 of supplies on account. 10 Transaction 10: December 16: Byte received 5 Super Toners purchased for resale to customers. The cost was $22.00 per toner. The invoice number was 7959, and payment is required in 30 days. Transaction 11: December 17: Byte was informed that Mr. Madoff who has an account with the company will never pay the $590.00 he owes. Record the transaction to write off Mr. Madoff's 11 accounts receivable account using the allowance method. 12 Transaction 12: December 17: Byte received invoice number 26354 in the amount of $725.00 from the local newspaper for advertising. 13 Transaction 13: December 18: Check #6004 was issued to pay Accounts Payable in the amount of $1,120.00. 14 Transaction 14: December 19: Byte sold 6 Super toners to a customer on account for $57.00 each. The sales order number was 12101. 15 Transaction 15: December 19: Byte records the cost of the 6 Super Toners sold using FIFO. The sales order number was 12101. 16 Transaction 16: December 21: Byte received an emailed invoice in the amount of $6,400.00 for computers that were drop shipped and received today. 17 Transaction 17: December 21: Byte billed various miscellaneous local customers $12,800.00 for computers that were delivered today. 18 Transaction 18: December 21: Record the cost of the computers that were sold today. 19 Transaction 19: December 22: Check #6005 was issued to pay salaries of $2,000.00 to equipment operators. (Ignore payroll taxes at this time.) 20 Transaction 20: December 22: Byte received a bill for $1,265.00 from Computer Parts and Repair Co. for repairs to the computer equipment. The invoice number was 43254. 21 Transaction 21: December 22: Check #6006 was issued to pay the advertising bill that was previously received and recorded from the local newspaper for advertising, invoice number 26354. 22 Transaction 22: December 22: Byte received 12 Super Toners purchased for resale to customers. The cost was $24.00 per toner. The invoice number was 8988, and payment is required in 30 days. 23 Transaction 23: 12/23: Byte received $21,575 from customers billed when they received delivery. 24 Transaction 24: December 23: Byte received an emailed invoice in the amount of $7,650.00 for computers that were drop shipped and received today. 25 Transaction 25: December 28: Byte billed various miscellaneous local customers $15,300.00 for computers that were delivered today. 26 Transaction 26: December 28: Record the cost of the computers that were sold today. 27 Transaction 27: December 28: Byte paid the bill that was previously received and recorded from Computer Parts and Repairs Co with Check #6007. The invoice number was 43254. 28 Transaction 28: 12/29: Byte received $14,750 from customers billed when they received delivery. 29 Transaction 29: December 29: Byte received a bill for the amount of $680.00 from AT&T for the telephone and internet access. The invoice number was 784537. Transaction 30: December 30: Check#6008 was issued to pay salaries of $2,000.00 to equipment operators. (Ignore payroll taxes at this time.) 30 Innnn

FOR JOURNAL ENTRIES: #15, #26, and #27

I need an answer with the following (for all listed journal entries below):

1) Transaction Name

2) Transaction Debit amount

3) Transaction Credit amount

Transaction 15: December 19: Byte records the cost of the 6 Super Toners sold using FIFO. The sales order number was 12101.

Transaction 26: December 28:   Record the cost of the computers that were sold today.

Transaction 27: December 28: Byte paid the bill that was previously received and recorded from Computer Parts and Repairs Co with Check # 6007. The invoice number was 43254.

Transaction 38: A physical inventory showed that only $526.00 worth of supplies remained on hand as of December 31.

Transaction 39: The interest on the note for the Ricoh Color Copier will be paid every six months. Record the December accrued interest on the note payable for the Ricoh purchased on December 1.

Transaction 40: Record a journal entry to reflect that one-half month's insurance has expired.

Transaction 44: The computer equipment on the Post Closing Trial Balance from last year was purchased last January for $20,000.00.  It is being depreciated based upon an estimated useful life of 5.0 years  with no salvage value. Calculate the depreciation for one year using the

straight-line method of depreciation.

Transaction 45: The Ricoh Color Copier, part of the office equipment,  is estimated to make 480,000 copies a year, have a useful life of 5 years and  a salvage value of $300.00.

During December, 8,250 copies were made.  Management has decided that assets purchased during a month are treated as if purchased on the first day of the month.  Calculate the depreciation for one month using the straight-line method of depreciation.

Transaction 46: The remaining office equipment, $62,100.00, was purchased last January and has an estimated useful life of 10.0 years with a salvage value of $3,100.00.  Calculate the depreciation for one year using the straight-line method of depreciation.

Transaction 47: A review of  Byte's payroll records show that unpaid salaries in the amount of $1,200.00 are owed by  Byte for three days, December 28 - 31.  (Ignore payroll taxes at this time.)

Transaction 48: Byte's CPA indicated that the Allowance for Doubtful Accounts should be increased by 5.00% of the ending balance of the Accounts Receivable account.

Trans 49: Byte's income taxes are to be computed @ rate of 25% of net income before taxes.

[IMPORTANT NOTE:  Since the income taxes are a percent of the net income, you will want to prepare the Income Statement through the Net Income Before Tax line.]

Transaction 50: Close the revenue account

Transaction 51: Close the expense accounts

Transaction 52: Close the dividend account

A. Prepare the Post Closing Trial Balance

B. Complete the Ratio Analysis --> Current Ratio; Receivable Turnover; Average Collection Period; Inventory Turnover; Average Days in Inventory; Gross Profit Rate; Profit Margin; Earnings per share (EPS)

For Journal Entries #50 and #51 use the following trial balance:

Answer 1

Byte of Accounting, Inc. Journal entries N-Date Account N Account 1 1-Dec 1110 Cash 3100 Common Stock 3120 Paid in Capital in Excess of Par Description Investment Investment Investment Debit - Credit - Calculation 72,900.00 51,300.00 =2,700*19 21,600.00 2 3-Dec 5,300.00 1211 Office Equipment 1110 Cash 2202 Note Payable Purchased Copier Purchased Copier Purchased Copier 530.00 5300*10% 4,770.00 6% 3 year note 3 3-Dec Paid rent 2,400.00 5010 Rent expense 1110 Cash Paid rent 2,400.00 4 3-Dec 260.00 =13 toners*$20 1160 Inventory 2101 Accounts Payable Toner Purchase Toner Purchase 260.00 5 10-Dec 456.00 =8 toners*$57 1120 Accounts Receivable 4100 Sales Revenue Sales on account Sales on account 456.00 6 10-Dec 160.00 =8 toners*$20 5300 Cost of goods sold 1160 Inventory Cost of toner sold Cost of toner sold 160.00 7 11-Dec 2,000.00 5020 Salaries and wages expense 1110 Cash Pay salaries Pay salaries 2,000.00 , 000.00 8 14-Dec 6,360.00 1 year wef Dec 16 1130 Prepaid Insurance 1110 Cash Prepaid Insurance Prepaid Insurance 6,360.00 9 15-Dec 400.00 1150 Supplies 2101 Accounts Payable Purchased Supplies on account Purchased Supplies on account 400.00 10 16-Dec 110.00 =5 toners*$22 1160 Inventory 2101 Accounts Payable Toner Purchase Toner Purchase 110.00 11 17-Dec 590.00 1121 Allowance for Doubtful Accounts Writing off uncollectibles 1120 Accounts Receivable Writing off uncollectibles 590.00 12 17-Dec 725.00 5030 Advertising expense 2101 Accounts Payable Invoice for Advertising Invoice for Advertising 725.00 13 18-Dec 1,120.00 2101 Accounts Payable 1110 Cash Paid off some debts Paid off some debts 1,120.00 14 19-Dec 342.00 =6 toners*$57 1120 Accounts Receivable 4100 Sales Revenue Sales on account Sales on account 342.00

15 19-Dec 122.00 5300 Cost of goods sold 1160 Inventory =(5 toners*$20)+(1 toners*$22) Cost of toner sold Cost of toner sold 122.00 16 21-Dec 6,400.00 1160 Inventory 2101 Accounts Payable Invoice for Computers Invoice for Computers 6,400.00 17 21-Dec 12,800.00 1120 Accounts Receivable 4100 Sales Revenue Billed customers for deliveries Billed customers for deliveries 12,800.00 18 21-Dec 6,400.00 5300 Cost of goods sold 1160 Inventory Record cost Record cost 6,400.00 19 22-Dec 2,000.00 5020 Salaries and wages expense 1110 Cash Pay salaries Pay salaries 2,000.00 20 22-Dec 1,265.00 5040 Maintenance & Repairs expense Repairs bill 2101 Accounts Payable Repairs bill 1,265.00 21 22-Dec 725.00 2101 Accounts Payable 1110 Cash Paid advertising bill Paid advertising bill 725.00 22 22-Dec 288.00 =12 toners*$24 1160 Inventory 2101 Accounts Payable Toner Purchase Toner Purchase 288.00 23 23-Dec 21,575.00 1110 Cash 1120 Accounts Receivable Received payment for outstanding bill Received payment for outstanding bill 21,575.00 24 23-Dec 7,650.00 1160 Inventory 2101 Accounts Payable Invoice for Computers Invoice for Computers 7,650.00 25 28-Dec 15,300.00 1120 Accounts Receivable 4100 Sales Revenue Billed customers for deliveries Billed customers for deliveries 15,300.00 26 28-Dec 7,650.00 5300 Cost of goods sold 1160 Inventory Record cost Record cost 7,650.00 27 28-Dec 1,265.00 2101 Accounts Payable 1110 Cash Paid Repair bill Paid Repair bill 1,265.00 28 29-Dec 14,750.00 1110 Cash 1120 Accounts Receivable Received payment for outstanding bill Received payment for outstanding bill 14,750.00 29 29-Dec 680.00 5140 Telephone and Internet expense Received phone and internet bill 2101 Accounts Payable Received phone and internet bill 680.00 30 30-Dec 2,000.00 5020 Salaries and wages expense 1110 Cash Pay salaries Pay salaries 2,000.00 31 30-Dec 1,430.00 =2,200*0.65 3300 Dividends 1110 Cash Paid dividends Paid dividends 1,430.00 32 30-Dec 1,755.00 =2,700*0.65 3300 Dividends 1110 Cash Paid dividends Paid dividends 1,755.00 33 30-Dec 7,965.00 1110 Cash 2102 Unearned Revenue Advance cash received for sales Advance cash received for sales 7,965.00

34 30-Dec No Entry No Entry Ping pong table ordered Ping pong table ordered 35 31-Dec No Entry No Entry Ping pong table ordered cancelled Ping pong table ordered cancelled 36 31-Dec 680.00 2101 Accounts Payable 1110 Cash Paid phone and internet bill Paid phone and internet bill 680.00

Credit Adjusting entries No. Date Account No. Account 37 31-Dec 1110 Cash 1120 Accounts Receivable Description Correct cash recorded Correct cash recorded Debit 25.00 Calculation 14775-14750 25.00 38 31-Dec 2,574.00 3100-526 5080 Supplies expense 1150 Supplies Supplies used Supplies used 2,574.00 39 31-Dec 23.85 4770*6%*1/12 5090 Interest expense 2103 Interest Payable Interest accrued on Copier note Interest accrued on Copier note 23.85 40 31-Dec 265.00 6360/12*0.5 5100 Insurance expense 1130 Prepaid Insurance Insurance expense Insurance expense 265.00 41 28-Dec 3,125.00 1160 Inventory 2101 Accounts Payable Invoice for Computers Invoice for Computers 3,125.00 42 28-Dec 6,250.00 3125*200% 1120 Accounts Receivable 4100 Sales Revenue Billed customers for deliveries Billed customers for deliveries 6,250.00 6,250.00 43 28-Dec 3,125.00 5300 Cost of goods sold 1160 Inventory Record cost Record cost 3,125.00 44 31-Dec 4,000.00 5110 Depreciation expense 1312 Accum. Depr. - Computer Equip Depreciation on Computers Depreciation on Computers (20000-0)/5 years 4,000.00 straight-line method 45 31-Dec 83.33 5110 Depreciation expense 1212 Accum. Depr. - Office Equip Depreciation on Copier Depreciation on Copier (5300-300)/5 years *1/12 83.33 straight-line method 46 31-Dec 5,900.00 5110 Depreciation expense 1212 Accum. Depr. - Office Equip Depreciation on Office Equip Depreciation on Office Equip (62100-3100)/10 years 5,900.00 straight-line method 47 31-Dec 1,200.00 5020 Salaries and wages expense 2105 Salaries and wages Payable Recording unpaid salaries Recording unpaid salaries 1,200.00 48 31-Dec 1,200.40 5120 Bad debt expense Estimated bad debt expense 1121 Allowance for Doubtful Accounts Estimated bad debt expense (24208*5%)-10 1,200.40 49 31-Dec 15,996.10 5150 Income tax expense 2106 Income Taxes Payable Income tax expense accrued Income tax expense accrued 63984.42*25% 15,996.10 From Income Statement

Closing entries 31-Dec 50 455,148.00 4100 Sales Revenue 3400 Income Summary Closing revenue Closing revenue 455,148.00 51 31-Dec 407,159.69 3400 Income Summary Closing expense 5010 Rent expense Closing expense 5020 Salaries and wages expense Closing expense 5030 Advertising expense Closing expense 5040 Maintenance & Repairs expense closing expense 5080 Supplies expense Closing expense 5090 Interest expense Closing expense 5100 Insurance expense Closing expense 5110 Depreciation expense Closing expense 5120 Bad debt expense Closing expense 5140 Telephone and Internet expense Closing expense 5150 Income tax expense Closing expense 5300 Cost of goods sold Closing expense 28,800.00 95,200.00 4,685.00 14,905.00 2,574.00 23.85 265.00 9,983.33 1,200.40 6,070.00 15,996.10 227,457.00 52 31-Dec 47,988.31 3400 Income Summary 3200 Retained Earnings Closing Income Summary Closing Income Summary 47,988.31 53 31-Dec 3,185.00 3200 Retained Earnings 3300 Dividends Closing Dividends Closing Dividends 3,185.00

Credit Credit Date Debit Date Credit Date Debit Date Allowance for Doubtful Accounts Prepaid Insurance 17-Dec 590.00 Op bal 600.00 Op bal 31-Dec 1,200.40 14-Dec 6,360.00 Byte of Accounting, Inc. T Accounts Date Debit Date Cash Op bal 56,975.00 3-Dec 1-Dec 72,900.00 3-Dec 23-Dec 21,575.00 11-Dec 29-Dec 14,750.00 14-Dec 30-Dec 7,965.00 18-Dec 22-Dec 22-Dec 28-Dec 30-Dec 30-Dec 30-Dec 31-Dec 25.00 31-Dec Date Debit Date Credit Accounts Receivable Op bal 26,000.00 17-Dec 590.00 10-Dec 456.00 23-Dec 21,575.00 19-Dec 342.00 29-Dec 14,750.00 21-Dec 12,800.00 31-Dec 25.00 28-Dec 15,300.00 28-Dec 6,250.00 31-Dec 265.00 530.00 2,400.00 2,000.00 6,360.00 1,120.00 2,000.00 725.00 1,265.00 2,000.00 1,430.00 1,755.00 680.00 Bal. Bal. 1,210.40 Bal. 6,095.00 151,925.00 Prepaid Rent 2,400.00 24,208.00 Supplies 2,700.00 400.00 Bal. Inventory Op bal 10-Dec Op bal 15-Dec Op bal 3-Dec 260.00 110.00 6,400.00 288.00 19-Dec 21-Dec 28-Dec 28-Dec 16-Dec 21-Dec 22-Dec 23-Dec 28-Dec 160.00 122.00 6,400.00 7,650.00 3,125.00 31-Dec 2,574.00 7,650.00 3,125.00 Bal. Bal. 2,400.00 Office Equipment 62,100.00 5,300.00 526.00 Bal. Accum. Depr. - Office Equip Op bal 5,900.00 Op bal 31-Dec 83.33 31-Dec 5,900.00 376.00 Computer Equipment 20,000.00 Op bal 3-Dec Accum. Depr. - Computer Equip Op bal 4,000.00 31-Dec 4,000.00 Bal. 11,883.33 Bal. Bal. Unearned Revenue Op bal 30-Dec 20,000.00 Interest Payable Op bal 31-Dec Bal. 8,000.00 Salaries and wages Payable Op bal 31-Dec 1,200.00 7,965.00 23.85 18-Dec 22-Dec 28-Dec 31-Dec 67,400.00 Accounts Payable 1,120.00 Op bal 725.00 3-Dec 1,265.00 15-Dec 680.00 16-Dec 17-Dec 21-Dec 22-Dec 22-Dec 23-Dec 29-Dec 28-Dec 3,665.00 260.00 400.00 110.00 725.00 6,400.00 1,265.00 288.00 7,650.00 680.00 3,125.00 20,778.00 7,965.00 Bal. 23.85 Bal. 1,200.00 Bal. Income Taxes Payable Op bal 31-Dec Bal. Note Payable Op bal 3-Dec 15,996.10 4,770.00 Bal. 15,996.10 Common Stock Op bal 41,800.00 1-Dec 51,300.00 Bal. 4,770.00 Paid in Capital in Excess of Par 17,600.00 1-Dec 21,600.00 Retained Earnings Op bal Op bal Dividends 24,000.00 Op bal 30-Dec 1,430.00 30-Dec 1,755.00 93,100.00 39,200.00 Bal. Bal. Rent expense 26,400.00 2,400.00 3,185.00 Advertising expense 3,960.00 725.00 Op bal Op bal 3-Dec Bal. Sales Revenue Op bal 10-Dec 19-Dec 21-Dec 28-Dec 28-Dec Bal. 24,000.00 Salaries and wages expense 88,000.00 11-Dec 2,000.00 22-Dec 2,000.00 30-Dec 2,000.00 31-Dec 1,200.00 Op bal 17-Dec 420,000.00 456.00 342.00 12,800.00 15,300.00 6,250.00 Bal. Bal. Bal. 28,800.00 Supplies expense 95,200.00 Interest expense Bal. 455,148.00 Maintenance & Repairs expense Op bal 13,640.00 22-Dec 1,265.00 4,685.00 Insurance expense Op bal 31-Dec Op bal 31-Dec Op bal 31-Dec 2,574.00 265.00 31-Dec 23.85 Bal. Bal. Bal. 265.00 14,905.00 Depreciation expense 2,574.00 Bad debt expense Income tax expense Bal. 23.85 Telephone and Internet expense Op bal 5,390.00 29-Dec 680.00 Op bal Op bal 31-Dec 1,200.40 31-Dec ####### Op bal 31-Dec 31-Dec 31-Dec 4,000.00 83.33 5,900.00 Bal. Bal. 1,200.40 Bal. 6,070.00 Bal. Income Summary Op bal 10-Dec 19-Dec 21-Dec 28-Dec 28-Dec 9,983.33 Cost of goods sold 210,000.00 160.00 122.00 6,400.00 7,650.00 3,125.00 Bal. 227,457.00 Bal.

Byte of Accounting Inc Accounts Cash Accounts Receivable Allowance for Doubtful Accounts Prepaid Insurance Prepaid Rent Supplies Inventory Office Equipment Accum. Depr.- Office Equip Computer Equipment Accum. Depr. - Computer Equip Accounts Payable Unearned Revenue Interest Payable Salaries and wages Payable Income Taxes Payable Note Payable Common Stock Paid in Capital in Excess of Par Retained Earnings Total Post Closing TB Debit Credit 151,925.00 24,208.00 1,210.40 6,095.00 2,400.00 526.00 376.00 67,400.00 11,883.33 20,000.00 8,000.00 20,778.00 7,965.00 23.85 1,200.00 15,996.10 4,770.00 93,100.00 39,200.00 68,803.31 272,930.00 272,930.00

Calculation for Income tax expense

455,148.00 Byte of Accounting, Inc. For the period ending 31st December Income Statement Sales Revenue Expenses: Rent expense Salaries and wages expense Advertising expense Maintenance & Repairs expense Supplies expense Interest expense Insurance expense Depreciation expense Bad debt expense Telephone and Internet expense Cost of goods sold Total Expenses 28,800.00 95,200.00 4,685.00 14,905.00 2,574.00 23.85 265.00 9,983.33 1,200.40 6,070.00 227,457.00 391,163.58 Net profit before taxes Income Tax Expense @ 25% Net profit 63,984.42 15,996.10 63984.42*25% 47,988.31 Statement of Retained Earnings For the period ending 31st December Opening Balance Net Profit Less Dividends Ending Balance 24,000.00 47,988.31 (3,185.00) 68,803.31