After the success of the company’s first two months, Santana Rey continues to operate Business Solutions. The November 30, 2021, unadjusted trial balance of Business Solutions (reflecting its transactions for October and November of 2021) follows. 

Business Solutions had the following transactions and events in December 2021. 

Dec. 2. Paid $1,025 cash to Hillside Mall for Business Solutions’s share of mall advertising costs. 

3. Paid $500 cash for minor repairs to the company’s computer. 

4. Received $3,950 cash from Alex’s Engineering Co. for the receivable from November. 

10. Paid cash to Lyn Addie for six days of work at the rate of $125 per day. 

14. Notified by Alex’s Engineering Co. that Business Solutions’s bid of $7,000 on a proposed project has been accepted. Alex’s paid a $1,500 cash advance to Business Solutions. 

15. Purchased $1,100 of computer supplies on credit from Harris Office Products. 

16. Sent a reminder to Gomez Co. to pay the fee for services recorded on November 8. 

20. Completed a project for Liu Corporation and received $5,625 cash. 

22–26. Took the week off for the holidays. 28 Received $3,000 cash from Gomez Co. on its receivable. 

29. Reimbursed S. Rey for business automobile mileage (600 miles at $0.32 per mile). 

31. S. Rey withdrew $1,500 cash from the company 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 $580 still available. 

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

c. As of December 31, Lyn Addie has not been paid for four days of work at $125 per day. 

d. The computer system, acquired on October 1, is expected to have a four-year life with no salvage value. 

e. The office equipment, acquired on October 1, is expected to have a five-year life with no salvage value. 

f. Three of the four months’ prepaid rent have expired. 

Required 

1. Prepare journal entries to record each of the December transactions and events for Business Solutions. 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, 2021.

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No. Account Title Debit Credit 101 Cash $38,264 106 Accounts receivable. 12,618 126 Computer supplies. 2,545 128 Prepaid insurance. 2,220 131 3,300 Prepaid rent Office equipment Accumulated depreciation-Office equipment. 163 8,000 164 %24 167 Computer equipment 20,000 168 Accumulated depreciation-Computer equipment Accounts payable 201 210 Wages payable 236 Unearned computer services revenue S. Rey, Capital.. S. Rey, Withdrawals 301 73,000 302 5,600 403 Computer services revenue 25,659 612 Depreciation expense-Office equipment 613 Depreciation expense-Computer equipment. 623 Wages expense Insurance expense 2,625 637 640 Rent expense Computer supplies expense Advertising expense. 652 655 1,728 676 Mileage expense Miscellaneous expenses 704 677 250 684 Repairs expense-Computer 805 Totals $98,659 $98,659