Financial Accounting On Oetober 1, 2011. Santana Rey launched a compuler services coenpany called Business Solutions, which provides consulting services, computer system installations, and cusbom program development. Rey adopts the calendar year for reporting parposes and expects to prepare the company"s first set of financial statements on December 31,2011. Octoher. 1 2 3 5 6 8 10 12 15 17 20 22 28 31 31 November S. Rey invesied $45,000 cash, a $20,000 cemputer system, and $8,000 of effice cquapment in the company. The company paid \$3,300 cach for four menths' nent. (Hint: Debit Prepaid Rent for \$3,300.) The company purchased \$1,420 of computer sapplies on crodit from Harris OAtice Products. The company paid $2,220 cash for ane year's premium on a property and liability insarance policy: (Hint: Debit Prepaid Insurance foe $2.220.3 The conpaay billod Easy Leasing $4,800 for services performed in installing a new Wob server. The company puid 51,420 cash for the compoter supplics purchased from Harris Office Products on Oetober 3. The company hired Lyn Addie as a part-time assivtant foe 5125 per day, as needed The company billed Fasy Leasing another \$1,400 for services performed. The company received $4.800 cash frum Easy Leasing as partial payment on its account. The company paid 5805 cash to repair computer equijment that was damaged when movisg it. The company paid 51.728 cash for advertisernents puhlished in the local newspaper. The company received 51,400 cant from Eany Leasing an its account. The company billed IFM Company 55,208 for services performed.U The company paid 5875 cash for Lyn Addie's wages for seven days' work. S. Rey withdrew $3,600 cash from the company for personal use. 1 The company reimbursed S. Rey in cash for business automoltle milleage allowance (Rey logged 1,000 miles at 50.32 per mile). 2 The company received $4,633 cash from Liu Comporative for computer services performed. 5 The company purchased computer supplies foe 51,125 cash from Harris Office Products. 8 13 18 22 24 25 28 30) 30) December 2 3 4 10 14 15 16 20 2226 28 29 31 The company billed Gomez Co, $5,668 for services performed. The company received notification from Alex's Engineering Co, that Business Solutions' bid of $3,950 for an upcoming project is accepted. The company received \$2,208 cash from IFM Company as partial payment of the Detober 28 bill. The company donated $250 cash to the United Way in the company"s name. The company completed work for Alex's Engineering Co. and sent it a bill for 53.950. The company sent another bill to IFM Company for the past-due amount of $3,000. The company reimbursed S. Rey in cash for business automobile milcage (1,200 males at 90.32 per mine). The company paid $1.750 cash for Lyn Addic's wages for 14 days" work. S. Rey withalrew $2,000 cash from the company for personal ase. Paid 51,025 cash to Hillside Mall for Business Solutions" share of mall advertising costs. Paid 5500 cash for minor repairs to the company"s computer. Received S3,950 cash from Alex's Enginecring Ca. for the receivable from November. Paid cash to Lyn Addie for six dsys of work at the rate of $125 per day. Notified by Alex's Einginecring Co. that Business Solutions' bid of 57,000 on a proposed project has been aceepted. Alex's paid a 51,500 cach advance to Basiaess Solutioes. Purchased S1,100 of computer supplies on credir from Harris Office Prodacts. Sent a remander to Gomez Co. to pay the fee for services recorded on November 8 . Completed a project for Lie Corporation and received $5,625 cash. Took the week off for the holidays. Received $3,000 cash from Gomer Co, on its receivable Rembursed S. Rey for business automobile mileage (600 miles at 90.32 per mile). S. Rey withdrew $1,$00 cash from the company for personal ase. The following additional facts are collected for use in making adjusting entries prior to preparing financial statements for the company's first three months: - The December 31 inventory count of computer supplies shows $580 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 $125 per day. - The company"s computer is expected to have a four-year life with no salvage value. - The office equipment is expected to have a five-year life with no salvage value. - Three of the four months" prepaid rent has expired. Required (AU on MS Excel) 1. Prepare journal entries to record all three month transactions and events for Business Solutions. 2. Post those entries to the accounts in the ledger. 3. Prepare adjusting entries to reflect a through f. 4. Post those entries to the accounts in the ledger. 5. Prepare an adjusted trial balance as of December 31,2011. 6. Record and post the necessary closing entries for Business Solutions. 7. Prepare a post-closing trial balance as of December 31, 2011 . 8. Prepare an income statement for the three months ended December 31,2011 . 9. Prepare a statement of owner's equity for the three months ended December 31,2011. 10. Prepare a balance shect as of December 31,2011. 11. Prepare a worksheet as of December 31, 2011 . In response to requests from customers, S. Rey will begin selling computer software. The company will extend cedit tems of 1/10,n30,FOB shipping point, to all customers who purchase this merchandise. However, no cash discouat is available on consulting fees. Additional accounts are added to its general fedger to accommodate the company's new merchandising activities. Also, Business Soluaions does not use reversing entries and, therefore, all revenue and expense accounts have xero beginniag balances as of January 1, 2012. Its transactions for January through March follow: January 4 5 7 9 11 13 15 16 17 20 22 24 26 26 29 The company paid cash to Lyn Addie for five days' work at the rate of 5125 per day. Four of the five days relate to wages payable that were acenued in the prior year. Santana Rey invested an additional $25,000 cash in the company. The company purchased $5,800 of merchandise from Kansas Corp. with terms of lyl0, ny30, FOB shipping point, invoice dated Janaary 7. The compuny received 52,668 cash from Gomez Ca as full puyment on its account. The company completed a five-day project for Alex"s Engincering Co, and billed it 55500 , which is the total price of $7,000 less the advance payment of $1,400. The company sold merchandise with a retail value of 55,200 and a cost of 53,560 to Lie Comp. invoice dated January 13. The company paid 5600 cash for freight charges on the merchandise purchased on January 7. The company received 54,000 cash from Delta Co. for compuler services provided. The company paid Kansas Corp. for the isvoice dated January 7 , net of the discount. Lia Com, returned 5500 of defective merchandise from its invoice dated lanuary 13. The teturned merchandisc, which had a $320 cost, is discarded. (The policy of Busincis Solutions is to leave the cost of defcctive products in cost of goods sold.) The company received the balance due from Liu Corp- net of both the discount and the credit for the returned merchandise. The company returned defective merchandise to Kansss Corp. and accepted a credit against future purchases. The defective merthandise invoice cost, net of the discount, was 5496 . The company purchased $9,000 of merchandise from Kansas Cerp. with terms of 1/10, n 30 , FOB destination, invoice dated January 26 . The company sold merchandise with a $4,640 cost for $5,800 on credit to KC, lnc, invoiee dated January 26. The company received a $496 credit memorandum from Kancas Corp. concerning the merchandise retumed on Jasuary 24. 31 The company paid cash to Lyn Addie for 10 days" wok at $125 per day. February 1 3 5 11 15 23 26 27 March 8 9 1] 16 19 24 25 30 The company paid \$2,475 cash to Hillside Mall for aneeher three months' rent in advance. The company paid Kansas Corp. for the balance doe, net of the cash discount, less the $496 amount in the credit memorandum. The compaay paid $600 cash to the local newxpuper for an advertising insert in today's paper. The company received the balance due from Alex's Enginecring Co. for foes billed on Jamury 11 . Santana Rey withdrew $4,800 cash from the company for personal use. The company sold merchandise with a $2,660 cost for $3,220 on credit to Delta Co., invoiec dated February 23. The company paid cash to Lyn Addie for cight days" woek at 5125 per day. The company reimbursed Santana Rey for busibess automobile mileage (600 miles at 50.32 per mile) The company purchased 52,730 of computer supplies from Hamis Office Products on credit, invoice dated March 8 . The company reeeived the balance due from Delta Ca. for metchandise sold on February 23. The compaay paid 5960 cash for minor repairs to the compuny's computer. The company received $5,260 cach from Dream, loc, for computing services provided. The company paid the fall amount due to larris Otfice Products, cobsisting of amounts created on December 15 (or $1,100) and March 8 . The company billed Easy Leasing for 59,047 of computing services peovided The company sold merchandise with a $2.002 cost for $2.800 on credit to Wildeat Serviees, invoice dated March 25. The company sold merchandise with a $1,048 cost for $2,220 on credit to IFM Company, invoice dated March 30. 31 The company reimbursed Santana Rey for business autcmobile mileage (400 milles at 50.32 per mile). 31 The company paid cash to Lyn Addie for 10 days" wok at $125 per day. February 1 3 5 11 15 23 26 27 March 8 9 1] 16 19 24 25 30 The company paid \$2,475 cash to Hillside Mall for aneeher three months' rent in advance. The company paid Kansas Corp. for the balance doe, net of the cash discount, less the $496 amount in the credit memorandum. The compaay paid $600 cash to the local newxpuper for an advertising insert in today's paper. The company received the balance due from Alex's Enginecring Co. for foes billed on Jamury 11 . Santana Rey withdrew $4,800 cash from the company for personal use. The company sold merchandise with a $2,660 cost for $3,220 on credit to Delta Co., invoiec dated February 23. The company paid cash to Lyn Addie for cight days" woek at 5125 per day. The company reimbursed Santana Rey for busibess automobile mileage (600 miles at 50.32 per mile) The company purchased 52,730 of computer supplies from Hamis Office Products on credit, invoice dated March 8 . The company reeeived the balance due from Delta Ca. for metchandise sold on February 23. The compaay paid 5960 cash for minor repairs to the compuny's computer. The company received $5,260 cach from Dream, loc, for computing services provided. The company paid the fall amount due to larris Otfice Products, cobsisting of amounts created on December 15 (or $1,100) and March 8 . The company billed Easy Leasing for 59,047 of computing services peovided The company sold merchandise with a $2.002 cost for $2.800 on credit to Wildeat Serviees, invoice dated March 25. The company sold merchandise with a $1,048 cost for $2,220 on credit to IFM Company, invoice dated March 30. 31 The company reimbursed Santana Rey for business autcmobile mileage (400 milles at 50.32 per mile). The following additional facts are available for preparing adjustments on March 31 prior to financial statement preparation: - The March 31 amount of computer supplies still available totals $2,005. - Three more months have expired since the company purchased its annual insurance policy at a $2,220 cost for 12 months of coverage. - Lyn Addie has not been paid for seven days of work at the rate of $125 per day. - Three months have passed since any prepaid rent bas been transferred to expense. The moathly rent expense is $825. - Depreciation on the computer equipment for January I through March 31 is $1,250. - Depreciation on the office equipment for January I through March 31 is $400. - The March 31 amount of merchandise inventory still available totals $704. Required (AII an Excel) 1. Prepare journal entries to record cach of the January through March transactions. 2. Post the journal entries in part 1 to the accounts in the company's general ledger. (Note: Begin with the ledger's post-closing adjusted balances as of December 31, 2011.) 3. Prepare a partial work sheet consisting of the first six columns (similar to the one shown in Exhibit 5B.1) that includes the unadjusted trial balance, the March 31 adjustments (a) through (g), and the adjusted trial balance. Do not prepare closing entries and do not journalize the adjustments or post them to the ledger. 4. Prepare an income statement (from the adjusted trial balance in part 3) for the three months ended Mareh 31. 2012. Use a single-step format. List all expenses without differentiating between selling expenses and general and administrative expenses. 5. Prepare a statement of owner's equity (from the adjusted trial balance in part 3 ) for the three months ended March 31, 2012 6. Prepare a classificd balance sheet (from the adjusted trial balance) as of March 31, 2012. Santana Rey receives the March bank statement for Business Solutions on April 11, 2012. The March 31 bank: statement shows an ending cash balance of 567,566,A comparison of the bank statement with the general ledger Cash account, No. 101, reveals the following. 1. S. Rey notices that the bank erroncously eleared a $500 check against her account in March that she did not issuc. The check documentation incloded with the bank statement shows that this check was actually issued by a company named Business Systems. 2. On March 25, the bank issued a $50 debit memorandum for the safety deposit box that Business Solutions agreed to rent from the bonk beginning March 25. 3. On March 26 , the bank issued a $102 debut menorandum for printed checks that Business Solutions oedered from the bank. 4. On March 31, the bank issued a credit memorandum for $33 interest camed on Busincis Solutions' checking account for the month of March. 5. S. Rey notices that the check she issued for $128 on March 31,2012 , has not yet cleared the bank: 6. S. Rey verifies that all deposits made in March do appear on the March bank statement. 7. The general ledger Cash account, No. 10I, shows an ending cash balance per books of S68,057 as of March 31 (prior to any reconciliation) Required (All on Excel) 1. Prcpare a bank reconciliation for Business Solutions for the month ended March 31, 2012. 2. Prcpare any necessary adjusting entries. Use Miseellaneous Expenses, for any bank charges. Use Interest Revenue, for any interest earned on the checking account for the month of March