Business Solutions P$1$ P$2$ P$3$ P$4$ P$5$

Serial problem began in Chapter $1.$ If previous chapter segments were not completed, the serial problem can

begin at this point. It is available in Connect with an algorithmic option.

SP $3$ After the success of the company$$s first two months, Santana Rey continues to operate Business

Solutions. $($Transactions for the first two months are described in the Chapter $2$ serial problem.$)$ The

November $30,2021,$ unadjusted trial balance of Business Solutions $($reflecting its transactions for October

and November of $2021)$ follows.

Alexander

Image$/$Shutterstock

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

No$.$ Account Title Debit Credit

$101$ Cash $$38,264$

$106$ Accounts receivable $12,618$

$126$ Computer supplies $2,545$

$128$ Prepaid insurance $2,220$

$131$ Prepaid rent $3,300$

$163$ Office equipment $8,000$

$164$ Accumulated depreciation$$Office equipment $ $0$

$167$ Computer equipment $20,000$

$168$ Accumulated depreciation$$Computer equipment $0$

$201$ Accounts payable $0$

$210$ Wages payable $0$

$236$ Unearned computer services revenue $0$

$307$ Common stock $73,000$

$318$ Retained earnings $0$

$319$ Dividends $5,600$

$403$ Computer services revenue $25,659$

$612$ Depreciation expense$-$Office equipment $0$

$613$ Depreciation expense$-$Computer equipment $0$

$623$ Wages expense $2,625$

$637$ Insurance expense $0$

$640$ Rent expense $0$

$652$ Computer supplies expense $0$

$655$ Advertising expense $1,728$

$676$ Mileage expense $704$

$677$ Miscellaneous expenses $250$

$684$ Repairs expense$-$Computer $805$

$901$ Income summary $0$

Totals $$98,659$ $$98,659$

The following additional facts are collected for use in making adjusting entries prior to preparing Page $148$

financial statements for the company$$s first three months.

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.

$2226$ 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\mathrm{.}32$ per mile$).$

$31$ Paid $$1,500$ cash for dividends.

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. Post those entries to the accounts inthe 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 $31,2021.$

Check $(3)$ Adjusted trial balance totals, $$109,034$

$4.$ 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 and post the necessary closing entries as of December $31,2021.$

$8.$ Prepare a post$-$closing trial balance as of December $31,2021.$

Check $(8)$ Post$-$closing trial balance totals, $$85,110$