After the success of the company’s first two months, Adriana Lopez continues to operate Success Systems. (Transactions for the first two months are described in the serial problem of Chapter 4.) The November 30, 2007, unadjusted trial balance of Success Systems (reflecting its transactions for October and November) follows.

Success Systems had the following transactions and events in December 2007.
Dec. 2 Paid \($1,200\) cash to Hilldale Mall for Success Systems’ share of mall advertising costs.
3 Paid \($500\) cash for minor repairs to the company’s computer.
4 Received \($7,000\) cash from Alex’s Engineering Co. for the receivable from November.
10 Paid cash to Michelle Jones for six days of work at the rate of \($150\) per day.
14 Notified by Alex’s Engineering Co. that Success’s bid of \($9,000\) on a proposed project has been accepted. Alex’s paid a \($2,500\) cash advance to Success Systems. (Debit Cash and Credit Unearned computer services revenue for  \($2,500.\)
15 Purchased \($2,100\) of computer supplies on credit from Cain Office Products.
16 Sent a reminder to Gomez Co. to pay the fee for services recorded on November 8.
20 Completed a project for Chang Corporation and received \($3,620\) cash.
22-26 Took the week off for the holidays.
26 Received \($3,000\) cash from Gomez Co. on its receivable.
26 Reimbursed Lopez’s business automobile mileage (800 miles at \($0.32\) per mile), 27 Lopez withdrew \($2,000\) cash for personal use.
The following additional facts are collected for use in making adjusting entries prior to preparing financial statements for the company’s first three months:

a. The December 31 inventory count of computer supplies shows \($775\) still available.

b. Three months have expired since the 12-month insurance premium was paid in advance.

c. As of December 31, Michelle Jones has not been paid for four days of work at \($150\) per day.

d. The company’s computer is expected to have a five-year life with no salvage value.

e. The office equipment is expected to have a four-year life with no salvage value.

f. Three of the four months’ prepaid rent has expired.
Required 

1. Prepare journal entries to record each of the December transactions and events for Success Systems.
Post those entries to the accounts in the ledger.
2. Prepare adjusting entries to reflect a through f. Post those entries to the accounts in the ledger.
3. Prepare an adjusted trial balance as of December 31, 2007.
4. Prepare an income statement for the three months ended December 31, 2007.
5. Prepare a statement of owner’s equity for the three months ended December 31, 2007.
6. Prepare a balance sheet as of December 31, 2007.

 Serial Problem:

Transcribed Image Text:

No. 101 Cash 106 Accounts receivable 126 Computer supplies 128 Prepaid insurance 131 Prepaid rent 163 Office equipment 164 167 Computer equipment 168 Account Title Debit Credit $ 68,996 15,800 3,350 2,400 3,500 10,000 Accumulated depreciation-Office equipment Accumulated depreciation-Computer equipment $ 25,000 0 201 Accounts payable 0 0 210 Wages payable 0 236 Unearned computer services revenue 301 A. Lopez, Capital 110,000 302 A. Lopez, Withdrawals 6,500 403 Computer services revenue 32,550 612 Depreciation expense-Office equipment 0 613 Depreciation expense-Computer equipment 0 623 Wages expense. 3.150 637 Insurance expense 0 640 Rent expense 0 652 655 676 Computer supplies expense Advertising expense Mileage expense 0 1,790 864 677 Miscellaneous expenses 300 684 Repairs expense-Computer 900 Totals $142,550 $142,550