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What would be the effect on the income statement for july

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Reference no: EM132724471

Oleg Buzzini 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 $180,000, making a cash down payment of $20,000. Borrowed the rest from a bank and issued a promissory note for the amount due.

July 4 Performed consulting services for a client on account, $14,000

July 12 Oleg Buzzini purchased stock in Cutting Edge for $15,000.

July 18 A customer paid $16,000 to Cutting Edge on account

July 20 Paid salary of assistant, $4,500

July 31 Paid $1,000 to the bank, of which $150 was interest and the rest

was a repayment of the loan.

July 31 Cutting Edge paid Buzzini a dividend of $500

Problem a) The building depreciated $500 for the month of July. Record the adjustment for depreciation in the accounting record you created in #2.

Problem b) A few sentences should do it. Suppose Oleg's accountant neglected to make the adjustment for depreciation. What would be the effect on the income statement for the month of July? Be specific.

Problem c) A sentence or two should be sufficient. Suppose Oleg's accountant neglected to make the adjustment for depreciation. What would be the effect on the cash flow statement for the month of July? Be specific.

Problem d) What amount do customers owe Cutting Edge at the end of July?

Reference no: EM132724471

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