Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby

Exercise 40

Analyzing, Journalizing, and Interpreting Business Activities
On September 1, Pat Hopkins established Ona Cloud Corporation (OCC) as a provider of cloud computing services. Pat contributed $10,000 for 1,000 shares of OCC. On September 8, OCC borrowed $30,000 from a bank, promising to repay the bank in two years. On September 10, OCC wrote a check for $20,000 to acquire computer equipment. On September 15, OCC received $1,000 of supplies purchased on account and, on September 16, paid $1,500 for September rent. Through September 22, OCC billed its customers for $8,000 of services, of which OCC collected $6,000 in cash. On September 28, OCC paid $200 for Internet and phone service this month. On September 29, OCC paid wages of $4,000 for the month. Finally, on September 30, OCC submitted its electricity meter reading online and determined thac the total charges for the month will be $300. This amount will be paid on October 14 through a preauthorized online payment.
Required:
1. Indicate the accounting equation effects of the September events, using a table similar to the one shown for Demonstration Case B on page 114. Reference each transaction by date.
2. Prepare journal entries to record the September events described above. Reference each transaction by date.
3. Using your answer to requirement 1 or 2, calculate OCC's preliminary net income for September. Is OCC profitable, based on its preliminary net income
4. Identify at least two adjustments that OCC will be required to make before it can prepare a final income statement for September.