After the success of its first two months, Mary Graham has decided to continue operating F.cho Systems. (The transactions that occurred in these months are described in Chapter 2.) Before proceeding in December, Graham adds these new accounts to the chart of accounts for the ledger:
Account No
Accumulated Depreciation, Office Equipment .............................164
Accumulated Depreciation, Computer Equipment .........................168
Wages Payable ...................................................................210
Unearned Computer Services Revenue ......................................236
Depreciation Expense, Office Equipment ...................................612
Depreciation Expense, Computer Equipment............................... 613
Insurance Expense ..............................................................637
Rent Expense....................................................................640
Computer Supplies Expense ....................................................652
Required
1. Prepare journal entries to record each of the following transactions for Echo Systems. Post the entries to the accounts in the ledger.
Dec. 3 Paid $2,100 to the Lakeshore Mall for the company's share of mall advertising costs.
3 Paid $1,200 to repair the company's computer.
4 Received $7,500 from Alamo Engineering Co. for the receivable from the prior month.
10 Paid Carly Smith for six days' work at the rate of $200 per day.
14 Notified by Alamo Engineering Co. that Echo's bid of $12,000 on a proposed project was accepted. Alamo paid an advance of $3,000.
17 Purchased $2,310 of computer supplies on credit from Abbott Office Products.
18 Sent a reminder to Fostek Co. to pay the fee for services originally recorded on November 8.
20 Completed a project for Elite Corporation and received $11,250 cash.
24-28 Took the week off for the holidays.
31 Received $5,700 from Fostek Co. on its receivable.
31 Reimbursed Mary Graham's business automobile expenses of 600 kilometres at $1.00 per
kilometre.
31 Mary Graham withdrew $3,600 cash from the business.
2. Prepare adjusting entries to record the following additional information collected on December 31, 2014. Post the entries to the accounts in the ledger.
a. The December 31 inventory of computer supplies was $1,440.
b. Three months have passed since the annual insurance premium was paid.
c. As of the end of the year, Carly Smith has not been paid for four days of work at the rate of $200 per day.
d. The computer is expected to have a four-year life with no residual value.
e. The office equipment is expected to have a three-year life with no residual value.
f. Prepaid rent for three of the four months has expired.
3. Prepare an adjusted trial balance as of December 31, 2014.
4. Prepare an income statement and statement of changes in equity for the three months ended December 31, 2014.
5. Prepare a balance sheet as of December 31, 2014.