The following were taken from the accounting records of Fly Night Travel Inca travel agency, as of January 31, 2019. On the forms provided, prepare an Income Statement and a Statement of Stockholder's Equity for the month of January, and a classified Balance Sheet on January 31. Note that $5,000 of the note is due in 2019 and the balance of the note is due in 2020.
Accounts Payable $6,000
Accounts Receivable $19,000
Accumulated Depreciation-Equipment $15,500
Advertising Expense $4,500
Common Stock $24,500
Cash $19,500
Depreciation Expense $6,000
Dividends $3,500
Equipment $45,000
Fees Earned $69,000
Notes Payable $19,000
Retained Earnings, January 1 $13,500
Retained Earnings, January 31 $222
Salary Expense $50,000
Oleg Buigi is the sole stockholder of Cutting Edge Fashion Corporation, a fashion consulting firm that earns its revenue in the form of consulting fees. Below are the transactions which occurred in the operation of Cutting Edge during the month of June. Record each transaction of Cutting Edge on the worksheet that has been supplied for this purpose, including entries in the description column in proper form where required. There is no need to total all of the columns.
July 1
Purchased Building at a cost of $185,000, making a cash down payment of $20,000. Borrowed the rest from a bank and issued a promissory note for the amount due.
Performed consulting services for client on account $14,500
Oleg Buigi purchased stock in Cutting Edge for $15,000
A customer paid $16,000 to Cutting Edge on account
Paid salary of assistant $4,500
Paid $1,000 to the bank, of which $100 was interest and the rest was a repayment of the loan.
Cutting Edge paid a dividend of $500
July 4
July 12
July 18
July 20
July 31
Refer to the accounting record that you completed in 2.
The building depreciated 50% of its value.
Record the new depreciation in the accounting record you created in 2.
Answer in the space on the last page of the exam. A few sentences should be sufficient.
Suppose Cutting Edge's accountant neglected to make the adjustment for unearned revenue.
Answer in the space on the last page of this exam. What amount do customers owe Cutting Edge at the end of June?