On September 1, Pat Hopkins established Ona Cloud Corporation (OCC) as a provider of cloud computing services. Pat contributed $14,000 for 1,400 shares of OCC. On September 8, OCC borrowed $36,500 from a bank, promising to repay the bank in two years. On September 10, OCC wrote a check for $22,500 to acquire computer equipment. On September 15, OCC received $1,450 of supplies purchased on account and, on September 16, paid $2,500 for September rent. Through September 22, OCC provided its customers $11,550 of services, of which OCC collected $6,900 in cash. On September 28, OCC paid $695 for Internet and phone service this month. On September 29, OCC paid wages of $5,450 for the month. Finally, on September 30, OCC submitted its electricity meter reading online and determined that the total charges for the month will be $645. This amount will be paid on October 14 through a preauthorized online payment.

Required:
a. Indicate the accounting equation effects of the September events.
b. Prepare journal entries to record the September events described above.
c. 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?
d. Identify at least two adjustments that OCC will be required to make before it can prepare a final income statement for September.

On September 1, Pat Hopkins established Ona Cloud Corporation (OCC) as a provider of cloud computing services. Pat contributed $14,000 for 1,400 shares of OCC.

Dr Cash 14,000

Cr Common stock 14,000

On September 8, OCC borrowed $36,500 from a bank, promising to repay the bank in two years.

Dr Cash 36,500

Cr Notes payable 36,500

On September 10, OCC wrote a check for $22,500 to acquire computer equipment.

Dr Equipment 22,500

Cr Cash 22,500

On September 15, OCC received $1,450 of supplies purchased on account and,

Dr Supplies 1,450

Cr Accounts payable 1,450

on September 16, paid $2,500 for September rent.

Dr Rent expense 2,500

Cr Cash 2,500

Through September 22, OCC provided its customers $11,550 of services, of which OCC collected $6,900 in cash.

Dr Cash 6,900

Dr Accounts receivable 4,650

Cr Service revenue 11,550

On September 28, OCC paid $695 for Internet and phone service this month.

Dr Internet and phone expenses 695

Cr Cash 695

On September 29, OCC paid wages of $5,450 for the month.

Dr Wages expense 5,450

Cr Cash 5,450

Finally, on September 30, OCC submitted its electricity meter reading online and determined that the total charges for the month will be $645. This amount will be paid on October 14 through a preauthorized online payment.

Dr Utilities expense 645

Cr Accounts payable 645

c) preliminary net income = $2,260, so the company seems to be profitable

d) OCC must adjust depreciation expense (equipment), interest expense on the bank loan and supplies expense.