Question
After the success of the companys first two months, Santana Rey continues to operate Business Solutions. The November 30, 2017, unadjusted trial balance of Business
After the success of the companys first two months, Santana Rey continues to operate Business Solutions. The November 30, 2017, unadjusted trial balance of Business Solutions (reflecting its transactions for October and November of 2017) follows.
No. | Account Title | Debit | Credit | |||
101 | Cash | $ | 38,364 | |||
106 | Accounts receivable | 13,318 | ||||
126 | Computer supplies | 2,645 | ||||
128 | Prepaid insurance | 1,980 | ||||
131 | Prepaid rent | 3,080 | ||||
163 | Office equipment | 8,600 | ||||
164 | Accumulated depreciationOffice equipment | $ | 0 | |||
167 | Computer equipment | 24,000 | ||||
168 | Accumulated depreciationComputer equipment | 0 | ||||
201 | Accounts payable | 0 | ||||
210 | Wages payable | 0 | ||||
236 | Unearned computer services revenue | 0 | ||||
307 | Common stock | 72,000 | ||||
318 | Retained earnings | 0 | ||||
319 | Dividends | 6,600 | ||||
403 | Computer services revenue | 32,419 | ||||
612 | Depreciation expenseOffice equipment | 0 | ||||
613 | Depreciation expenseComputer equipment | 0 | ||||
623 | Wages expense | 2,525 | ||||
637 | Insurance expense | 0 | ||||
640 | Rent expense | 0 | ||||
652 | Computer supplies expense | 0 | ||||
655 | Advertising expense | 1,708 | ||||
676 | Mileage expense | 644 | ||||
677 | Miscellaneous expenses | 160 | ||||
684 | Repairs expenseComputer | 795 | ||||
Totals | $ | 104,419 | $ | 104,419 | ||
Business Solutions had the following transactions and events in December 2017.
Dec. | 2 | Paid $945 cash to Hillside Mall for Business Solutions share of mall advertising costs. | |
3 | Paid $490 cash for minor repairs to the companys computer. | ||
4 | Received $3,950 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 $7,500 on a proposed project has been accepted. Alexs paid a $1,600 cash advance to Business Solutions. | ||
15 | Purchased $2,000 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 $6,525 cash. | ||
2226 | Took the week off for the holidays. | ||
28 | Received $3,100 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 $590 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 has 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, adjusting entries to the accounts in the ledger. 3. Prepare an adjusted trial balance as of December 31, 2017. 4. Prepare an income statement for the three months ended December 31, 2017. 5. Prepare a statement of retained earnings for the three months ended December 31, 2017. 6. Prepare a balance sheet as of December 31, 2017. 7. Record and post the necessary closing entries as of December 31, 2017. 8. Prepare a post-closing trial balance as of December 31, 2017.
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