Question

At June 30, 2022, 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 Share Capital 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 2022, 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
3 Paid $3,600 cash for a 12-month insurance policy effective July 1. 3 6 Paid the first 2 (July and August 2022) months' rent for an annual lease of office space for $4,000 per month Paid $3,800 for supplies. .
9. 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. 10 Collected $1.200 cash on account from Milani Brothers. This client was billed in June when Green River performed the service. 13 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.
18. Paid semi-monthly salaries for $11,000. 20 Performed services worth $28,000 on account and billed customers. 20 Received a bill for $2,200 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 $10,000 of revenue from the cash advance received July 16.
27 Received $15.000 cash from customers billed on July 20.
Adjustment data:
1. Adjustment of prepaid insurance. 2. Adjustment of prepaid rent. 3.Supplies used, $1,250. . 4. Equipment depreciation, $500 per month. 5. Accrual of interest on note payable. 6. Salaries for the second half of July, $11,000, to be paid on August 1. . 7. Estimated utilities expense for July, $800 (invoice will be received in August). 8.Income tax for July $1,200, will be paid in August. The chart of accounts for Green River 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, Share Capital, 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. Enter the July 1 balances in the ledger accounts. Cash
Accounts Receivable
Supplies Accounts Payable Unearned Service Revenue Common Stock
Retained Earnings

Answer 1

The question involves recording and adjusting accounting transactions for Green River Computer Consultants. It requires entering initial balances in the ledger, recording transactions related to July 2022, and making monthly adjustments to accurately reflect expenses and revenues.

Step-by-step explanation:

The question pertains to recording and adjusting accounting transactions for Green River Computer Consultants during July 2022. The scenario requires the application of accounting principles to record transactions in the company's ledger and prepare for the monthly adjustments that reflect the financial status at the end of the month. This involves entering initial balances, recording each transaction, and making necessary adjustments for expenses like depreciation, supplies used, and accrued expenses to ensure that the financial statements accurately represent the company’s financial position.

Beginning balances based on the post-closing trial balance would be entered as follows:

Cash: $5,230

Accounts Receivable: $1,200

Supplies: $690

Accounts Payable: $400

Unearned Service Revenue: $1,120

Share Capital: $3,600

Retained Earnings: $2,000

Transactions would then be recorded chronologically, affecting the respective ledger accounts. For example, the purchase of equipment on July 1 and the subsequent cash payment would result in an increase in equipment value and a decrease in cash within the ledger. The acquisition of financing through common stock issuance would increase cash and share capital. Other transactions include payment for insurance, rent, and services performed, which would all need to be recorded accordingly. Adjustments may include the amortization of prepaid expenses, recognition of depreciation, accruing of interest on the note payable, and recording unpaid expenses such as salaries, utilities, and income tax.

Answer 2

The initial balances for July 1st in your ledger accounts based on the provided information are shown below:

The Ledger Account

Green River Computer Consultants - July 1 Ledger Balances:

Cash: $5,230

Accounts Receivable: $1,200

Supplies: $690

Accounts Payable: $400

Unearned Service Revenue: $1,120

Share Capital: $3,600 + $50,000 (July 2nd transaction) = $53,600

Retained Earnings: $2,000

These are the initial balances for July 1st in your ledger accounts based on the provided information