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. Number 101 Account Title Cash 106 Accounts receivable 126 Computer supplies 128 Prepaid insurance 131 Prepaid rent 163 Office equipment 164 Accumulated depreciation-Office equipment 167 Computer equipment 168 Accumulated depreciation-Computer equipment 201 Accounts payable 210 Wages payable 236 Unearned computer services revenue 307 Common stock 318 Retained earnings 319 Dividends 403 Computer services revenue 612 613 623 Wages expense 637 640 Rent expense 652 Depreciation expense-Office equipment Depreciation expense-Computer equipment Insurance expense Computer supplies expense 655 Advertising expense 676 Mileage expense 677 Miscellaneous expenses 684 Repairs expense-Computer 901 Income summary Totals Debit $ 38,364 Credit 13,318 2,545 2,100 2,960 8,400 $ 0 22,000 0 0 0 0 68,000 0 5,900 33,074 0 0 2,200 0 0 0 1,698 644 210 735 0 $ 101,074 $ 101,074 Business Solutions had the following transactions and events in December 2021. December 2 Paid $925 cash to Hillside Mall for Business Solutions's share of mall advertising costs. December 3 Paid $470 cash for minor repairs to the company's computer. December 4 Received $4,450 cash from Alex's Engineering Company for the receivable from November. December 10 Paid cash to Lyn Addie for six days of work at the rate of $110 per day. December 14 Notified by Alex's Engineering Company that Business Solutions's bid of $7,700 on a proposed project has been accepted. Alex's paid a $1,700 cash advance to Business Solutions. December 15 Purchased $1,700 of computer supplies on credit from Harris Office Products. December 16 Sent a reminder to Gomez Company to pay the fee for services recorded on November 8. December 20 Completed a project for Liu Corporation and received $6,075 cash. December 22-26 Took the week off for the holidays. December 28 Received $3,000 cash from Gomez Company on its receivable. December 29 Reimbursed S. Rey for business automobile mileage (500 miles at $0.27 per mile). December 31 Paid $1,400 cash for dividends. 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 $650 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 $110 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. Post those entries to the accounts in the ledger. 2-a. Prepare adjusting entries to reflect a through f. 2-b. Post the journal entries to record each of the December transactions, adjusting entries to the accounts in the ledger. 3. Prepare an adjusted trial balance as of December 31, 2021. 4. Prepare an income statement for the three months ended December 31, 2021. 5. Prepare a statement of retained earnings for the three months ended December 31, 2021. 6. Prepare a classified balance sheet as of December 31, 2021. 7. Record the necessary closing entries as of December 31, 2021. 8. Prepare a post-closing trial balance as of December 31, 2021. 1 2 Paid $925 cash to Hillside Mall for Business Solutions's share of mall advertising costs. Paid $470 cash for minor repairs to the company's computer. 3 Received $4,450 cash from Alex's Engineering Company for the receivable from November. 4 Paid cash to Lyn Addie for six days of work at the rate of $110 per day. 5 Notified by Alex's Engineering Company that Business Solutions's bid of $7,700 on a proposed project has been accepted. Alex's paid a $1,700 cash advance to Business Solutions. 6 Purchased $1,700 of computer supplies on credit from Harris Office Products. 7 8 Sent a reminder to Gomez Company to pay the fee for services recorded on November 8. Completed a project for Liu Corporation and received $6,075 cash. 9 Received $3,000 cash from Gomez Company on its receivable. 10 Reimbursed S. Rey for business automobile mileage (500 miles at $0.27 per mile). 11 Paid $1,400 cash for dividends. 1 The December 31 inventory count of computer supplies shows $650 still available. 2 Three months have expired since the 12-month insurance premium was paid in advance. 3 4 5 6 As of December 31, Lyn Addie has not been paid for four days of work at $110 per day. The computer system, acquired on October 1, is expected to have a four-year life with no salvage value. The office equipment, acquired on October 1, is expected to have a five-year life with no salvage value. Three of the four months' prepaid rent have expired. Required 1 Required 2A Required 2B Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 Post the journal entries to record each of the December transactions, adjusting entries to the accounts in the ledger. 101: Cash 106: Accounts Receivable Date Debit Credit Balance Date Debit Credit Balance December 01 38,364 December 01 13,318 Date December 01 126: Computer Supplies Debit Credit Balance 2,545 Date December 01 128: Prepaid Insurance Debit Credit Balance 2,100 131: Prepaid Rent Date December 01 Debit Credit Balance Date 2,960 December 01 163: Office Equipment Debit Credit Balance 8,400 164: Accumulated Depreciation-Office Equipment Date December 01 Debit Credit Balance Date 0 December 01 168: Accumulated Depreciation-Computer Equipment Date December 01 Date December 01 Date December 01 Date December 01 Debit Credit 210: Wages Payable Debit Balance Date 0 December 01 Credit Balance Date 0 December 01 307: Common Stock Debit 319: Dividends Debit 167: Computer Equipment Debit Credit Balance 22,000 201: Accounts Payable Debit Credit Balance 0 236: Unearned Computer Services Revenue Debit Credit Balance 0 Credit Balance Date 318: Retained Earnings Debit Credit Balance 68,000 December 01 0 Credit Balance 5,900 Date December 01 403: Computer Services Revenue Debit Credit Balance 33,074 612: Depreciation Expense-Office Equipment Date December 01 Debit Credit Date December 01 Date December 01 Date December 01 623: Wages Expense Debit 613: Depreciation Expense-Computer Equipment Balance 0 Date December 01 Credit Balance Date 2,200 December 01 640: Rent Expense Debit Credit Balance Date 0 December 01 655: Advertising Expense Debit Credit Balance Date 1,698 December 01 Debit Credit 637: Insurance Expense Debit Balance 0 Credit Balance 0 652: Computer Supplies Expense Debit Credit 676: Mileage Expense Debit Balance 0 Credit Balance 644 Date December 01 677: Miscellaneous Expense Debit Credit Balance 210 Date December 01 684: Repairs Expense-Computer Debit Credit Balance 735 Cash Accounts receivable Computer supplies BUSINESS SOLUTIONS Adjusted Trial Balance December 31, 2021 Account Title Debit Credit Prepaid insurance Prepaid rent Office equipment Accumulated depreciation-Office equipment Computer equipment Accumulated depreciation-Computer equipment Accounts payable Wages payable Unearned computer services revenue Common stock Retained earnings Dividends Computer services revenue Depreciation expense-Office equipment Depreciation expense-Computer equipment Wages expense Insurance expense Rent expense Computer supplies expense Advertising expense Mileage expense Miscellaneous expenses Repairs expense-Computer Totals Revenue Expenses Total expenses BUSINESS SOLUTIONS Income Statement For Three Months Ended December 31, 2021 < Required 3 Required 5 > Prepare a statement of retained earnings for the three months ended December 31, 2021. BUSINESS SOLUTIONS Statement of Retained Earnings For Three Months Ended December 31, 2021 Retained earnings, October 1, 2021 Retained earnings, December 31, 2021 Required 4 Required 6 > Current assets Plant assets Total equity Total Liabilities and Equity BUSINESS SOLUTIONS Balance Sheet December 31, 2021 Assets Liabilities Equity 1 Record the entry to close the revenue account(s). 2 Record the entry to close the expense account(s). 3 Record the entry to close the Income summary account. 4 Record the entry to close the dividends account. Note : = journal entry has been entered Record entry Credit Clear entry View general journal > Totals BUSINESS SOLUTIONS Post-Closing Trial Balance December 31, 2021 Debit Credit < Required 7 Required 8