After the success of the companys first two months, Santana Rey continues to operate Business Solutions. The November 30, 2019, unadjusted trial balance of Business Solutions (reflecting its transactions for October and November of 2019) follows.
| No. | Account Title | Debit | Credit |
| 101 | Cash | $ | 39,064 | | | |
| 106 | Accounts receivable | | 13,418 | | | |
| 126 | Computer supplies | | 2,545 | | | |
| 128 | Prepaid insurance | | 1,920 | | | |
| 131 | Prepaid rent | | 2,980 | | | |
| 163 | Office equipment | | 8,600 | | | |
| 164 | Accumulated depreciationOffice equipment | | | | $ | 0 |
| 167 | Computer equipment | | 20,800 | | | |
| 168 | Accumulated depreciationComputer equipment | | | | | 0 |
| 201 | Accounts payable | | | | | 0 |
| 210 | Wages payable | | | | | 0 |
| 236 | Unearned computer services revenue | | | | | 0 |
| 307 | Common stock | | | | | 66,000 |
| 318 | Retained earnings | | | | | 0 |
| 319 | Dividends | | 5,900 | | | |
| 403 | Computer services revenue | | | | | 34,944 |
| 612 | Depreciation expenseOffice equipment | | 0 | | | |
| 613 | Depreciation expenseComputer equipment | | 0 | | | |
| 623 | Wages expense | | 2,500 | | | |
| 637 | Insurance expense | | 0 | | | |
| 640 | Rent expense | | 0 | | | |
| 652 | Computer supplies expense | | 0 | | | |
| 655 | Advertising expense | | 1,668 | | | |
| 676 | Mileage expense | | 624 | | | |
| 677 | Miscellaneous expenses | | 190 | | | |
| 684 | Repairs expenseComputer | | 735 | | | |
| | Totals | $ | 100,944 | | $ | 100,944 |
| |
Business Solutions had the following transactions and events in December 2019.
| Dec. | 2 | | Paid $935 cash to Hillside Mall for Business Solutions share of mall advertising costs. |
| | 3 | | Paid $470 cash for minor repairs to the companys computer. |
| | 4 | | Received $4,450 cash from Alexs Engineering Co. for the receivable from November. |
| | 10 | | Paid cash to Lyn Addie for six days of work at the rate of $120 per day. |
| | 14 | | Notified by Alexs Engineering Co. that Business Solutions bid of $7,100 on a proposed project has been accepted. Alexs paid a $2,100 cash advance to Business Solutions. |
| | 15 | | Purchased $1,200 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 $5,775 cash. |
| | 2226 | | Took the week off for the holidays. |
| | 28 | | Received $3,200 cash from Gomez Co. on its receivable. |
| | 29 | | Reimbursed S. Rey for business automobile mileage (500 miles at $0.24 per mile). |
| | 31 | | The company paid $1,500 cash in dividends. |
| | | | |
The following additional facts are collected for use in making adjusting entries prior to preparing financial statements for the companys first three months.
- The December 31 inventory count of computer supplies shows $620 still available.
- Three months have expired since the 12-month insurance premium was paid in advance.
- As of December 31, Lyn Addie has not been paid for four days of work at $120 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. Prepare journal entries to record each of the December transactions and events for Business Solutions. 2-a. Prepare adjusting entries to reflect a through f. 2-b. Post the journal entries to record each of the December transactions from Requirement 1 and adjusting entries from Requirement 2A. After completing Requirement 7, post the closing entries to the general ledger accounts. 3. Prepare an adjusted trial balance as of December 31, 2019. 4. Prepare an income statement for the three months ended December 31, 2019. 5. Prepare a statement of retained earnings for the three months ended December 31, 2019. 6. Prepare a balance sheet as of December 31, 2019. 7. Record the necessary closing entries as of December 31, 2019 and then post the closing entries to the general ledger in Requirement 2B. 8. Prepare a post-closing trial balance as of December 31, 2019.
Part 1, and 2A are already answered and correct.
Req 1 Req 2A Req 2B Reg 3 Req 4 Reg 5 Reg 6 Req 7 Req 8 Prepare journal entries to record each of the December transactions and events for Business Solutions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) No Date General Journal Debit Credit 1 Dec 02 Advertising expense 935 Cash 935 2 Dec 03 470 Repairs expense-Computer Cash O 470 | Dec 04 Cash 4,450 Accounts receivable 4,450 > 4 Dec 10 720 Wages expense Cash 720 5 Dec 14 Cash 2,100 Unearned computer services revenue 2,100 6 Dec 15 1,200 > Computer supplies Accounts payable 1,200 7 Dec 16 No journal entry required > 8 Dec 20 Cash 5,775 Computer services revenue 5,775 9 Dec 28 Cash 3,200 Accounts receivable 3,200 10 Dec 29 Mileage expense 120 CO Cash 120 11 Dec 31 Dividends 1,500 Cash 1,500 Req 1 Req 2A Req 2B Req3 Reg 4 Req 5 Req 6 Req 7 Req 8 Prepare adjusting entries to reflect a through f. No Transaction General Journal Debit Credit 1 a. 3,125 Computer supplies expense Computer supplies 3,125 2 b. Insurance expense 480 Prepaid insurance 480 3 C. Wages expense 480 Wages payable 480 4 d. 1,300 Depreciation expense-Computer equipment Accumulated depreciationComputer equipment 1,300 5 e. 430 Depreciation expense-Office equipment Accumulated depreciationOffice equipment 430 6 f. Rent expense 2,235 Prepaid rent 2,235 Reg 1 Reg 2A Req 2B Req3 Reg 4 Reg 5 Reg 6 Reg 7 Reg 8 Post the journal entries to record each of the December transactions from Requirement 1 and adjusting entries from Requirement 2A. After completing Requirement 7, post the closing entries to the general ledger accounts. 101: Cash 106: Accounts Receivable Date Debit Credit Date Debit Credit Balance Balance 39,064 Dec. 01 Dec. 01 13,418 126: Computer Supplies Debit Credit 128: Prepaid Insurance Debit Credit Date Date Balance 2,545 Balance 1,920 Dec. 01 Dec. 01 131: Prepaid Rent Debit Credit 163: Office Equipment Debit Credit Date Date Balance Balance 2,980 Dec. 01 Dec. 01 8,600 164: Accumulated Depreciation Office Equipment Date Debit Credit Balance Dec. 01 0 167: Computer Equipment Debit Credit Date Balance 20,800 Dec, 01 168: Accumulated Depreciation-Computer Equipment Date Debit Credit Balance Dec. 01 0 201: Accounts Payable Debit Credit Date Balance Dec. 01 0 210: Wages Payable Debit Credit Date Balance 236: Unearned Computer Services Revenue Date Debit Credit Balance Dec, 01 0 0 Dec. 01 0 307: Common Stock Debit Credit 318: Retained Earnings Debit Credit Date Date Balance Balance 66,000 Dec. 01 Dec. 01 0 319: Dividends Debit Credit 403: Computer Services Revenue Debit Credit Date Balance Date Balance Dec. 01 5,900 Dec. 01 34,944 612: Depreciation Expense-Office Equipment Date Debit Credit Balance Dec. 01 0 613: Depreciation Expense-Computer Equipment Date Debit Credit Balance Dec. 01 0 623: Wages Expense Debit Credit 637: Insurance Expense Debit Credit Date Date Balance Balance 2,500 Dec. 01 Dec. 01 0 640: Rent Expense Debit Credit 652: Computer Supplies Expense Debit Credit Date Balance Balance 0 Date Dec. 01 Dec. 01 0 655: Advertising Expense Debit Credit 676: Mileage Expense Debit Credit Date Date Dec. 01 Balance 1,668 Balance 624 Dec. 01 677: Miscellaneous Expense Debit Credit 684: Repairs Expense-Computer Debit Credit Balance Date Balance Date Dec. 01 190 Dec. 01 735 901: Income Summary Date Debit Credit Balance Reg 1 Req 2A Req 2B Reg 3 Reg 4 Req 5 Req 6 Reg 7 Req 8 Prepare an adjusted trial balance as of December 31, 2019. BUSINESS SOLUTIONS Adjusted Trial Balance December 31, 2019 Account Title Debit Credit Cash Accounts receivable Computer supplies 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 $ 0 $ 0 Reg 1 Reg 2A Req 2B Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 Prepare an income statement for the three months ended December 31, 2019. BUSINESS SOLUTIONS Income Statement For Three Months Ended December 31, 2019 Revenue Computer services revenue Expenses Depreciation expense-Office equipment Depreciation expenseComputer equipment Wages expense Insurance expense Rent expense Computer supplies expense Advertising expense Mileage expense Miscellaneous expenses Repairs expense-Computer Total exp ses 0 Net income Req 1 Req 2A Reg 2B Req 3 Reg 4 Req 5 Req 6 Req 7 Req 8 Prepare a statement of retained earnings for the three months ended December 31, 2019. BUSINESS SOLUTIONS Statement of Retained Earnings For Three Months Ended December 31, 2019 Retained earnings, October 1, 2019 $ Add: Net income 0 0 Less: Dividends Retained earnings, December 31, 2019 $ 0 Req 1 Req 2A Req 2B Reg 3 Req 4 Req 5 Req 6 Req 7 Req 8 Prepare a balance sheet as of December 31, 2019. BUSINESS SOLUTIONS Balance Sheet December 31, 2019 Assets Cash Accounts receivable Prepaid insurance Prepaid rent Computer supplies Office equipment Accumulated depreciation Office equipment Computer equipment Accumulated depreciation Computer equipment Total Assets 0 0 0 Liabilities Accounts payable Wages payable Unearned computer services revenue Total Liabilities 0 Equity Common stock Retained earnings Total equity $ 0 Total Liabilities and Equity $ 0 Req 1 Req 2A Reg 2B Reg 3 Req 4 Req 5 Req 6 Reg 7 Req 8 Record the necessary closing entries as of December 31, 2019 and then post the closing entries to the general ledger in Requirement 2B. No Date General Journal Debit Credit 1 Dec. 31 Computer services revenue Income summary 2 Dec. 31 Income summary 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 3 Dec. 31 Income summary Retained earnings 4 Dec. 31 Retained earnings Dividends Req 1 Req 2A Req 2B Req 3 Reg 4 Reg 5 Req 6 Req 7 Req 8 Prepare a post-closing trial balance as of December 31, 2019. BUSINESS SOLUTIONS Post-Closing Trial Balance December 31, 2019 Debit Credit Cash Accounts receivable Computer supplies Prepaid insurance Prepaid rent Office equipment Accumulated depreciationOffice equipment Computer equipment Accumulated depreciation Computer equipment Accounts payable Wages payable Unearned computer services revenue Common stock Retained earnings Totals $ 0 $ 0 Req 1 Req 2A Req 2B Reg 3 Req 4 Reg 5 Reg 6 Req 7 Req 8 Prepare journal entries to record each of the December transactions and events for Business Solutions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) No Date General Journal Debit Credit 1 Dec 02 Advertising expense 935 Cash 935 2 Dec 03 470 Repairs expense-Computer Cash O 470 | Dec 04 Cash 4,450 Accounts receivable 4,450 > 4 Dec 10 720 Wages expense Cash 720 5 Dec 14 Cash 2,100 Unearned computer services revenue 2,100 6 Dec 15 1,200 > Computer supplies Accounts payable 1,200 7 Dec 16 No journal entry required > 8 Dec 20 Cash 5,775 Computer services revenue 5,775 9 Dec 28 Cash 3,200 Accounts receivable 3,200 10 Dec 29 Mileage expense 120 CO Cash 120 11 Dec 31 Dividends 1,500 Cash 1,500 Req 1 Req 2A Req 2B Req3 Reg 4 Req 5 Req 6 Req 7 Req 8 Prepare adjusting entries to reflect a through f. No Transaction General Journal Debit Credit 1 a. 3,125 Computer supplies expense Computer supplies 3,125 2 b. Insurance expense 480 Prepaid insurance 480 3 C. Wages expense 480 Wages payable 480 4 d. 1,300 Depreciation expense-Computer equipment Accumulated depreciationComputer equipment 1,300 5 e. 430 Depreciation expense-Office equipment Accumulated depreciationOffice equipment 430 6 f. Rent expense 2,235 Prepaid rent 2,235 Reg 1 Reg 2A Req 2B Req3 Reg 4 Reg 5 Reg 6 Reg 7 Reg 8 Post the journal entries to record each of the December transactions from Requirement 1 and adjusting entries from Requirement 2A. After completing Requirement 7, post the closing entries to the general ledger accounts. 101: Cash 106: Accounts Receivable Date Debit Credit Date Debit Credit Balance Balance 39,064 Dec. 01 Dec. 01 13,418 126: Computer Supplies Debit Credit 128: Prepaid Insurance Debit Credit Date Date Balance 2,545 Balance 1,920 Dec. 01 Dec. 01 131: Prepaid Rent Debit Credit 163: Office Equipment Debit Credit Date Date Balance Balance 2,980 Dec. 01 Dec. 01 8,600 164: Accumulated Depreciation Office Equipment Date Debit Credit Balance Dec. 01 0 167: Computer Equipment Debit Credit Date Balance 20,800 Dec, 01 168: Accumulated Depreciation-Computer Equipment Date Debit Credit Balance Dec. 01 0 201: Accounts Payable Debit Credit Date Balance Dec. 01 0 210: Wages Payable Debit Credit Date Balance 236: Unearned Computer Services Revenue Date Debit Credit Balance Dec, 01 0 0 Dec. 01 0 307: Common Stock Debit Credit 318: Retained Earnings Debit Credit Date Date Balance Balance 66,000 Dec. 01 Dec. 01 0 319: Dividends Debit Credit 403: Computer Services Revenue Debit Credit Date Balance Date Balance Dec. 01 5,900 Dec. 01 34,944 612: Depreciation Expense-Office Equipment Date Debit Credit Balance Dec. 01 0 613: Depreciation Expense-Computer Equipment Date Debit Credit Balance Dec. 01 0 623: Wages Expense Debit Credit 637: Insurance Expense Debit Credit Date Date Balance Balance 2,500 Dec. 01 Dec. 01 0 640: Rent Expense Debit Credit 652: Computer Supplies Expense Debit Credit Date Balance Balance 0 Date Dec. 01 Dec. 01 0 655: Advertising Expense Debit Credit 676: Mileage Expense Debit Credit Date Date Dec. 01 Balance 1,668 Balance 624 Dec. 01 677: Miscellaneous Expense Debit Credit 684: Repairs Expense-Computer Debit Credit Balance Date Balance Date Dec. 01 190 Dec. 01 735 901: Income Summary Date Debit Credit Balance Reg 1 Req 2A Req 2B Reg 3 Reg 4 Req 5 Req 6 Reg 7 Req 8 Prepare an adjusted trial balance as of December 31, 2019. BUSINESS SOLUTIONS Adjusted Trial Balance December 31, 2019 Account Title Debit Credit Cash Accounts receivable Computer supplies 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 $ 0 $ 0 Reg 1 Reg 2A Req 2B Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 Prepare an income statement for the three months ended December 31, 2019. BUSINESS SOLUTIONS Income Statement For Three Months Ended December 31, 2019 Revenue Computer services revenue Expenses Depreciation expense-Office equipment Depreciation expenseComputer equipment Wages expense Insurance expense Rent expense Computer supplies expense Advertising expense Mileage expense Miscellaneous expenses Repairs expense-Computer Total exp ses 0 Net income Req 1 Req 2A Reg 2B Req 3 Reg 4 Req 5 Req 6 Req 7 Req 8 Prepare a statement of retained earnings for the three months ended December 31, 2019. BUSINESS SOLUTIONS Statement of Retained Earnings For Three Months Ended December 31, 2019 Retained earnings, October 1, 2019 $ Add: Net income 0 0 Less: Dividends Retained earnings, December 31, 2019 $ 0 Req 1 Req 2A Req 2B Reg 3 Req 4 Req 5 Req 6 Req 7 Req 8 Prepare a balance sheet as of December 31, 2019. BUSINESS SOLUTIONS Balance Sheet December 31, 2019 Assets Cash Accounts receivable Prepaid insurance Prepaid rent Computer supplies Office equipment Accumulated depreciation Office equipment Computer equipment Accumulated depreciation Computer equipment Total Assets 0 0 0 Liabilities Accounts payable Wages payable Unearned computer services revenue Total Liabilities 0 Equity Common stock Retained earnings Total equity $ 0 Total Liabilities and Equity $ 0 Req 1 Req 2A Reg 2B Reg 3 Req 4 Req 5 Req 6 Reg 7 Req 8 Record the necessary closing entries as of December 31, 2019 and then post the closing entries to the general ledger in Requirement 2B. No Date General Journal Debit Credit 1 Dec. 31 Computer services revenue Income summary 2 Dec. 31 Income summary 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 3 Dec. 31 Income summary Retained earnings 4 Dec. 31 Retained earnings Dividends Req 1 Req 2A Req 2B Req 3 Reg 4 Reg 5 Req 6 Req 7 Req 8 Prepare a post-closing trial balance as of December 31, 2019. BUSINESS SOLUTIONS Post-Closing Trial Balance December 31, 2019 Debit Credit Cash Accounts receivable Computer supplies Prepaid insurance Prepaid rent Office equipment Accumulated depreciationOffice equipment Computer equipment Accumulated depreciation Computer equipment Accounts payable Wages payable Unearned computer services revenue Common stock Retained earnings Totals $ 0 $ 0
