I am working on the serial problem for Success Systems located in the McGraw-Hill Financial and Managerial Accounting book 2009. I have done all the problems up to the closing entries for March 31, 2010. I am not sure if my closing entries are correct and would like someone to look at them for me. My file is attached.

NAME DAT E CLASS NAME DAT E Success Systems Trial Balance October 31, 2009 47,040 5,208 1,420 Prepaid Insurance Prepaid Rent Office Equipment Computer Equipment 2,220 3,300 8,000 20,000 Accounts Payable A. Lopez, Capital A. Lopez, Withdrawls Computer Services Revenue Wages Expense Advertising Expense Repairs Expense-Computer Totals CLASS NAME DAT E Success Systems Trial Balance November 30, 2009 Cash Accounts Receivable Computer Supplies Cash Accounts Receivable Computer Supplies 0 83,000 Accounts Payable A. Lopez, Capital A. Lopez, Withdrawls Computer Services Revenue 875 1,940 805 94,408 94,408 Wages Expense Advertising Expense Mileage Expense Miscellaneous Expense Repairs Expense-Computer Totals CLASS NAME DAT E Success Systems Trial Balance December 31, 2009 $ Prepaid Insurance Prepaid Rent Office Equipment Computer Equipment 11,408 3,600 48,052 12,618 2,545 2,220 3,300 8,000 20,000 $ 83,000 5,600 25,659 2,625 1,940 704 250 $ 805.00 108,659 $ 58,160 5,668 3,645 Prepaid Insurance Prepaid Rent Office Equipment Computer Equipment 2,220 3,300 8,000 20,000 Accounts Payable Unearned Computer Services Revenue A. Lopez, Capital A. Lopez, Withdrawls Computer Services Revenue Wages Expense Advertising Expense Mileage Expense 108,659 Miscellaneous Expense Repairs Expense-Computer Totals CLASS NAME Success Systems Income Statement For Three Months Ended December 31, 2009 Cash Accounts Receivable Computer Supplies Expenses Depreciation Expense - Office Equipment Depreciation Expense - Computer Equipment Wages Expense 31,284 3,375 2,965 896 250 1,305 116,884 Insurance Expense Rent Expense Computer Supplies Expense Advertising Expense Mileage Expense Miscellaneous Expense Repairs Expense-Computer Total Expenses Net Income 116,884 DAT E CLASS NAME DAT E Success Systems Statement of Owner's Equity For Three Months Ended December 31, 2009 Revenue Computer Services Revenue 1,100 1,500 83,000 7,100 A. Lopez, Capital, October 1, 2009 Plus: Owner Investment Net Income 31,284 400 1,250 3,875 NAME 896 250 1,305 17,036 83,000 14,248 97,248 7,100 $ 90,148 DAT E Success Systems Statement of Retained Earnings For Three Months Ended December 31, 2009 Less: Dividends Retained Earnings, December 31, 2009 NAME DAT E $ Computer Supplies Prepaid Insurance Prepaid Rent Office Equipment 58,160 5,668 Prepaid Insurance Prepaid Rent Office Equipment Accum. Depr.-Office Equipment 7,600 Computer Equipment Accum. Depr.-Computer Equipment Accounts Payable Wages Payable 18,750 93,248 Liabilities $ 14,248 14,248 7,100 7,148 1,100 500 Unearned Computer Services Revenue Total Liabilities $ 1,500 3,100 $ 90,148 93,248 Equity A. Lopez, Capital Total Liabilities and Equity Cash Accounts Receivable Computer Supplies 580 1,665 825 8,000 (400) 20,000 (1,250) Accounts Payable Wages Payable $ CLASS NAME DAT E Success Systems Post-Closing Trial Balance December 31, 2009 Assets Cash Accounts Receivable Accum. Depr.-Office Equipment Computer Equipment Accum. Depr.-Computer Equipment Total Assets CLASS 14,248 Retained Earnings, October 1, 2009 Plus: Net Income CLASS Success Systems Balance Sheet December 31, 2009 $ A. Lopez, Withdrawls A. Lopez, Capital, December 31, 2009 555 2,475 3,065 2,965 Unearned Computer Services Revenue A. Lopez, Capital Retained Earnings Totals Success Systems Trial Balance January 31, 2010 58,160 5,668 580 Cash Accounts Receivable-Alex's Engineering Accounts Receivable-IFM Co. 1,665 825 8,000 400 20,000 1,250 1,100 500 94,898 1,500 83,000 7,148 94,898 Accounts Receivable-KC, Inc. Merchandise Inventory Computer Supplies Prepaid Insurance Prepaid Rent Office Equipment Accum. Depr.-Office Equipment Computer Equipment Accum. Depr.-Computer Equipment Accounts Payable A. Lopez, Capital Computer Services Revenue Sales Sales Returns & Allowances Sales Discounts COGS Wages Expense Totals CLASS NAME DAT E Success Systems Trial Balance January 31, 2010 CLASS NAME DAT E Success Systems Trial Balance February 28, 2010 86,264 5,500 3,000 Cash Accounts Receivable-IFM Co. Accounts Receivable-Delta Co. 5,800 6,646 580 1,665 Accounts Receivable-KC, Inc. Merchandise Inventory Computer Supplies Prepaid Insurance 825 8,000 400 20,000 1,250 9,604 115,148 11,000 11,000 500 47 $ 8,200 1,375 148,402 $ 148,402 Prepaid Rent Office Equipment Accum. Depr.-Office Equipment Computer Equipment Accum. Depr.-Computer Equipment Accounts Payable A. Lopez, Capital A. Lopez, Withdrawls Computer Services Revenue Sales Sales Returns & Allowances Sales Discounts COGS Wages Expense Advertising Expense Mileage Expense Totals CLASS NAME Success Systems Trial Balance March 1, 2010 74,283 3,000 3,220 Cash Accounts Receivable-Wildcat Services Accounts Receivable-Easy Leasing 5,800 3,896 580 1,665 3,300 8,000 400 20,000 1,250 1,100 115,148 4,800 11,000 14,220 5,220 5,800 794 3,310 Prepaid Insurance Prepaid Rent Office Equipment Accum. Depr.-Office Equipment 1,665 3,300 8,000 Computer Equipment Accum. Depr.-Computer Equipment Accounts Payable A. Lopez, Capital 1,250 0 115,148 A. Lopez, Withdrawls Computer Services Revenue Sales 4,800 Sales Returns & Allowances Sales Discounts COGS Wages Expense 500 47 13,962 2,375 Advertising Expense Mileage Expense Repairs Expense-Computer Totals NAME DAT E 90,148 25,000 18,686 133,834 4,800 $ 129,034 DAT E 25,160 19,240 600 320 960 161,198 Less: Dividends Retained Earnings, March 31, 2010 161,198 Cash Accounts Receivable-Wildcat Services Accounts Receivable-Easy Leasing Accounts Receivable-IFM Accounts Receivable-KC, Inc. Merchandise Inventory Computer Supplies Prepaid Insurance Prepaid Rent Office Equipment Accum. Depr.-Office Equipment CLASS Computer Equipment Accum. Depr.-Computer Equipment Accounts Payable Wages Payable Success Systems Statement of Retained Earnings For Three Months Ended March 31, 2010 Retained Earnings, January 1, 2010 Plus: Net Income CLASS Success Systems Post-Closing Trial Balance March 31, 2010 $ A. Lopez, Withdrawls A. Lopes, Capital, March 31, 2010 NAME 20,000 47 10,860 2,375 600 143,118 CLASS A. Lopez, Capital, January 1, 2010 Plus: Investment by A. Lopez Plus: Net Income 400 500 192 143,118 DAT E Success Systems Statement of Owner's Equity For Three Months Ended March 31, 2010 77,845 2,800 8,900 Accounts Receivable-IFM Accounts Receivable-KC, Inc. Merchandise Inventory Computer Supplies $ $ 7,148 18,686 25,834 4,800 21,034 77,845 2,800 8,900 5,220 5,800 704 2,005 1,110 825 8,000 800 20,000 1,250 875 Unearned Computer Services Revenue A. Lopez, Capital Retained Earnings Totals 110,348 21,034 133,209 134,307 Success Systems NAME DATE CLASS PAGE GENERAL JOURNAL DATE 1 Oct 2 3 4 DESCRIPTION 1 Cash Computer Equipment Office Equipment A. Lopez, Capital 2 Prepaid rent Cash 7 3 Computer supplies Accounts Payable - Harris Office Products 9 10 5 Prepaid Insurance Cash 13 6 Accounts Receivable Computer Services Revenue 16 8 Accounts Payable - Harris Office Products Cash 18 19 12 Accounts Receivable Computer Services Revenue 22 15 Cash Accounts Receivable - Easy Listening 25 17 Repairs Expense - Computer Cash 27 28 31 20 Advertising Expense Cash 32 Advertising in newspaper 22 Cash Accounts Receivable - Easy Listening 33 34 28 Accounts Receivable Computer services revenue 36 37 31 Wages Expense Cash 40 1,420 106 403 1,400 101 106 4,800 684 101 805 655 101 1,940 101 106 1,400 106 403 5,208 623 101 875 302 101 3,600 676 101 320 101 403 4,633 126 101 1,125 106 403 5,668 101 106 2,208 677 101 250 106 403 3,950 676 101 384 623 101 1,750 302 101 2,000 655 101 1,025 684 101 500 101 106 3,950 623 101 750 101 236 1,500 126 201 1,100 101 403 5,625 101 106 3,000 676 101 192 302 101 1,500 652 126 3,065 637 128 555 623 210 500 613 168 1,250 612 164 400 640 131 2,475 403 901 31,284 901 612 613 623 637 640 652 655 676 677 684 17,036 901 301 14,248 301 302 7,100 106.4 106 3,000 106.6 106 2,668 9 43 31 A. Lopez, withdrawls Cash 44 Cash withdrawl by owner 42 Nov 2 1 Mileage Expense Cash 11 2 Cash Computer Services Revenue 5 14 5 Computer Supplies Cash 7 8 18 8 Accounts Receivable Computer Services Revenue 10 11 20 18 Cash Accounts Receivable 14 23 17 22 Miscellaneous Expense Cash 18 Donation to United Way 16 24 Accounts Receivable Computer Services Revenue 19 20 27 28 Mileage Expense Cash 23 29 30 Wages Expense Cash 25 26 33 30 A. Lopez, withdrawls Cash 28 29 36 Dec 32 2 Advertising Expense Cash 38 3 Repairs expense - computer Cash 34 35 42 4 Cash Accounts Receivable 37 38 1 10 Wages Expense Cash 41 3 14 Cash Unearned Computer Services Revenue 43 44 7 15 Computer Supplies Accounts Payable 47 10 20 Cash Computer Services Revenue 50 12 28 Cash Accounts Receivable 52 53 16 29 Mileage Expense Cash 56 19 59 31 A. Lopez, withdrawls Cash 60 Cash withdrawl by owner 31 Computer Supplies Expense Computer Supplies 61 62 21 31 Insurance Expense Prepaid Insurance 65 25 31 Wages Expense Wages Payable 67 68 28 31 Depr. Expense-Computer Equipment Accum. Depr.-Computer Equipment 71 30 31 Depr. Expense-Office Equipment Accum. Depr.-Office Equipment 73 74 34 31 Rent Expense Prepaid Rent 76 77 37 80 31 Computer Services Revenue Income Summary 81 Closing the revenue account 79 31 Income Summary Depr. Exp.-Office Equipment Depr. Exp.-computer Equipment Wages Expense Insurance Expense Rent Expense Computer Supplies Expense Advertising Expense Mileage Expense Miscellaneous Expense Repairs Expense-Computer 82 83 84 85 86 87 88 89 90 91 92 39 31 Income Summary A. Lopez, Capital 95 43 31 A. Lopez, Capital A. Lopez, Withdrawls 97 98 45 Jan 101 1 Accounts Receivable-IFM Co. Accounts Receivable 48 1 Accounts Receivable-Gomez Co. Accounts Receivable 104 52 4 Wages Payable Wages Expense Cash 106 107 108 54 111 5 Cash A. Lopez, Capital 112 Owner Investment 110 7 Merchandise Inventory Accounts Payable 113 114 57 9 Cash Accounts Receivable-Gomez Co. 117 61 11 Accounts Receiveable-Alex's Engineering Unearned Computer Services Revenue Computer Services Revenue 119 120 121 63 13 Accounts Receivable-Lui Corp Sales 124 67 13 COGS Merchandise Inventory 126 127 69 15 Merchandise Inventory Cash 130 73 16 Cash Computer Services Revenue 133 76 20 Accounts Payable Merchandise Inventory Cash 135 136 137 79 20 Sales Returns & Allowances Accounts Receivable-Liu Corp. 139 140 82 22 Cash Sales Discounts Accounts Receivable-Liu Corp. 142 143 144 24 Accounts Payable Merchandise Inventory 146 147 26 Merchandise Inventory Accounts Payable 150 26 Accounts Receivable-KC, Inc. Sales 153 26 COGS Merchandise Inventory 155 156 31 Wages Expense Cash 159 Feb 162 1 Prepaid Rent Cash 3 Accounts Payable Merchandise Inventory Cash 164 165 166 169 5 Advertising Expense Cash 170 Advertising in newspaper 168 11 Cash Accounts Receivable-Alex's Engineering 171 172 101 301 25,000 175 15 A. Lopez, withdrawls Cash 176 Cash withdrawl by owner 23 Accounts Receivable-Delta Co. Sales 177 178 119 201 5,800 101 106.6 2,668 106.1 236 403 5,500 1,500 106.5 413 5,200 502 119 3,560 119 101 600 101 403 4,000 201 119 101 5,800 106 23 COGS Merchandise Inventory 180 181 110 26 Wages Expense Cash 184 113 27 Mileage Expense Cash 186 187 115 Mar 190 8 Computer Supplies Accounts Payable 119 120 9 Cash Accounts Receivable-Delta Co. 193 122 11 Repairs Expense-Computer Cash 195 196 126 16 Cash Computer Services Revenue 199 128 19 Accounts Payable Cash 202 131 24 Accounts Receivable-Easy Leasing Computer Services Revenue 204 205 135 25 Accounts Receivable-Wildcat Services Sales 28 500 101 415 106.5 4,653 47 25 COGS Merchandise Inventory 210 211 30 Accounts Receivable-IFM Co. Sales 213 214 142 143 COGS Merchandise Inventory 217 496 119 201 9,000 106.8 413 5,800 502 119 4,640 623 101 1,250 131 101 2,475 201 119 101 8,504 655 101 600 146 496 31 Mileage Expense Cash 219 220 148 31 Computer Supplies Expense Computer Supplies 222 223 151 31 Insurance Expense Prepaid Insurance 226 155 227 31 Wages Expense Wages Payable 229 157 31 Rent Expense Prepaid Rent 231 232 160 31 Depr. Expense-Computer Equipment Accum. Depr.-Computer Equipment 234 235 164 31 Depr. Expense-Office Equipment Accum. Depr.-Office Equipment 237 238 31 COGS Merchandise Inventory 240 241 5,500 302 101 4,800 168 106.7 413 3,220 Mar 244 31 Computer Services Revenue Income Summary 245 Closing the Revenue Account 31 Income Summary Depr. Exp.-Office Equipment Depr. Exp.-computer Equipment Wages Expense Insurance Expense Rent Expense Computer Supplies Expense Advertising Expense Mileage Expense Repairs Expense-Computer 246 247 248 249 250 251 252 253 254 255 502 119 2,660 623 101 1,000 676 101 192 126 201 2,730 101 106.7 3,220 31 Income Summary A. Lopez, Capital 257 258 173 31 A. Lopez, Capital A. Lopez, Withdrawls 260 261 177 Jan 264 1 Cash Partner Capital 180 1 Cash Partner Capital 266 267 182 1 Cash Partner Capital 269 270 186 Cash Common Shares 273 188 Cash Preferred Stock 275 276 191 Cash Notes Payable 279 960 101 403 5,260 201 101 3,830 106.3 403 8,900 106.2 413 2,800 502 119 2,002 106.4 413 2,220 502 119 1,100 676 101 128 652 126 1,305 637 128 555 623 210 875 640 131 2,475 613 168 1,250 612 164 400 502 119 90 403 901 25,160 403 612 613 623 637 640 652 655 676 684 9,365 901 301 15,795 301 302 4,800 101 90,148 195 960 Apr 282 16 Investments in trading securities Cash 197 30 Investments in trading securities Cash 284 285 200 Jun 30 Market adjustment for trading securities ? Adjustment on trading securities 202 203 204 8,900 205 206 207 2,800 28 209 210 2,002 211 212 213 2,220 214 215 216 1,100 217 218 219 128 220 221 222 1,305 223 224 225 555 226 227 228 875 229 230 231 2,475 232 233 234 1,250 235 236 237 400 238 239 240 90 241 242 243 25,160 244 245 246 400 1,250 1,500 555 2,475 1,305 600 320 960 247 248 249 250 251 252 253 254 255 256 257 15,795 258 259 260 4,800 261 262 263 90,148 264 265 101 22,537 266 22,537 267 268 101 22,537 269 22,537 270 271 101 86,000 272 86,000 273 274 101 86,000 275 86,000 276 277 101 86,000 278 86,000 279 280 20,300 101 281 20,300 282 283 4,650 101 284 4,650 Trading Securities purchase 286 199 201 3,830 Trading Securities purchase 283 196 198 5,260 Borrowed from bank, 7%, 10-year note, $1,000 per month 280 193 194 684 101 860 shares $100 par value, 7% preferred stock to Uncle Marcello 277 278 190 192 3,220 To record stock purchase by Cicely Lopez 274 187 189 2,730 New partner capital investment, 4:1 ownership of Success Systems 271 272 184 185 192 4:1 New partner capital investment, 99,148/4=22,537 268 181 183 1,000 1:1 New partner capital investment 265 178 179 2,660 Close A. Lopez, Withdrawls Account 262 175 176 3,220 Close the Income Summary 259 172 174 4,800 Closing the Expense Accounts 256 169 171 5,500 Adjustment for remaining inventory, 794-90=704 242 166 170 101 106.1 Adjustment for depreciation of office equipment - $8,000/5 yr =$1600/12=133.33x3 mos=$399.99 = $400. 239 165 167 600 Adjustment for depreciation of computer equipment- Equipment cost $20,000, life of equipment 4 years, depreciation per year $5,000, three months expense. $5,000/12=$416.66 x 3 mos = 1249.99 = 1250. 236 162 163 90 8,414 Adjustment for use of prepaid rent - $825 x 3 = $2,475 233 159 161 2,475 Adjustment for Lyn Addie's unpaid wages. $125 x 7 = 875. 230 156 158 1,250 Adjustment for 3 mos insurance-4 years at $2,220/12=$185 x 3 mos=$555. 228 153 154 4,640 Adjustment for supplies used 224 225 150 152 5,800 Reimbursement of mileage for A. Lopez 221 147 149 9,000 Recording cost of March sale to IFM Co. 218 144 145 201 119 Sale of merchandise 215 216 140 141 4,700 Recording cost of March sale to Wildcat Services 212 137 139 500 Sale of merchandise 209 136 138 414 106.5 Billed for computer services 206 207 133 134 58 5,742 Full amount due to Harris Office Products. 203 130 132 4,000 Received payment from Dream Inc. 200 201 127 129 600 Paid for computer repair 197 198 124 125 3,560 Received payment from Delta Co. 194 121 123 5,200 Purchase from Harris Office Products 191 192 117 118 Reimbursement of mileage for A. Lopez 188 114 116 7,000 Paid Lyn Addie's wages 185 111 112 2,668 Recording cost of February sale to Delta Co. 182 183 108 109 5,800 Sale of merchandise 179 104 107 25,000 Received payment 173 174 101 103 625 Paid Kansas Corp. balance due with discount 167 98 105 500 125 Paid three month's rent 163 95 102 210 623 101 Paid Lyn Addie's wages 160 91 92 99 Recording cost of January 26th sale to KC, Inc. 157 158 90 100 2,668 Sale of merchandise 154 88 89 97 Purchase from Kansas Corp. 151 152 86 87 96 3,000 Returned defective merchandise to Kansas Corp. 148 149 84 85 93 7,100 Received payment, less returns and 1, n30 discount 145 83 94 14,248 Defective merchandise returned 141 80 81 Paid Kansas Corp. 1/10, net 30. Discount $5,800x.01=$58 138 77 78 400 1,250 3,875 555 2,475 3,065 2,965 896 250 1,305 Received payment from Delta Co. 134 74 75 31,284 Payment for January 7 freight charges 131 132 71 72 2,475 Recording cost of January 13th sale to Liu Corp. 128 129 68 70 400 Sale of merchandise 125 65 66 1,250 Completion of work on project 122 123 62 64 500 Received payment. 118 59 60 555 Purchase of merchandise from Kansas Corp. 115 116 56 58 3,065 Paid Lyn Addie's wages 109 53 55 1,500 Transfer balance to new A/R accounts 105 50 51 192 Transfer balance to new A/R accounts 102 103 47 49 3,000 Close A. Lopez, Withdrawls Account 99 44 46 5,625 Close the Income Summary 96 41 42 1,100 Closing the Expense Accounts 93 94 38 40 1,500 Adjustment for use of prepaid rent - $3,300 / 4 mos = $825 x 3 = $2,475 78 35 36 750 Adjustment for depreciation of office equipment - $8,000/5 yr =$1600/12=133.33x3 mos=$399.99 = $400. 75 32 33 3,950 Adjustment for depreciation of computer equipment- Equipment cost $20,000, life of equipment 4 years, depreciation per year $5,000, three months expense. $5,000/12=$416.66 x 3 mos = 1249.99 = 1250. 72 29 31 500 Adjustment for Lyn Addie's unpaid wage. $125 x 4 = $125. 69 70 26 27 1,025 Adjustment for 3 mos insurance-4 years at $2,220/12=$185 x 3 mos=$555 66 23 24 2,000 Adjustment for supplies used 63 64 20 22 1,750 Reimbursement of mileage for A. Lopez 57 58 17 18 384 Received payment from Gomez Co. 54 55 14 15 3,950 Received payment from Liu Corporation for completed project 51 11 13 250 Purchase of supplies on credit 48 49 8 9 2,208 Received advance payment from Alex's Engineering Co. on project 45 46 5 6 5,668 Paid Lyn Addie's wages 42 2 4 1,125 Received payment-Alex's Engineering 39 40 43 44 4,633 Repairs to computer 36 40 41 320 Paid a portion of advertising at Hillside Mall 33 37 39 3,600 Cash withdrawl by owner 30 34 35 875 Paid Lyn Addie's wages 27 31 32 5,208 Reimbursement of mileage for A. Lopez 24 28 30 1,400 Billed Alex's Engineering Co. 21 22 25 26 1,940 Received payment from IFM Co. 15 22 24 805 Billed Gomez Co. for services 12 13 19 21 4,800 Purchase computer supplies-Harris Orrice Products 9 16 17 1,400 Received payment from Liu Corporation 6 13 15 1,420 Reimbursement of mileage for A. Lopez 3 4 10 12 4,800 Paid Lyn Addie's wages 41 289 201 101 7 8 2,220 Billed IFM Co for services 38 39 290 4,800 5 Received payment 35 288 106 403 4 6 Paid for computer repair 29 30 287 2,220 3 1,420 Received payment 26 281 128 101 2 3,300 Billed Easy Leasing for services 23 24 263 1,420 1 83,000 Paid balance due 20 21 243 126 201 CREDIT Billed Easy Leasing for services 17 189 3,300 Paid for 12 month's premium in advance 14 15 161 131 101 Purchase of supplies on credit 11 12 100 55,000 20,000 8,000 Paid four month's rent 8 31 DEBIT 101 167 163 301 Owner investment, cash/equipment 5 6 1 POST. REF. 285 286 1,400 287 1,400 288 289 290 NAME DATE CLASS GENERAL LEDGER Cash ACCOUNT DATE Oct Nov Dec Jan Feb 1 2 5 8 15 17 20 22 31 31 1 2 5 18 22 28 30 30 2 3 4 10 14 20 28 29 31 4 5 9 15 16 20 22 31 1 3 5 ITEM 101 ACCOUNT NO. POST. REF. BALANCE DEBIT CREDIT 55,000 3,300 2,220 1,420 4,800 805 1,940 1,400 875 3,600 320 4,633 1,125 2,208 250 384 1,750 2,000 1,025 500 3,950 750 1,500 5,625 3,000 192 1,500 625 25,000 2,668 600 4,000 5,742 4,653 1,250 2,475 8,414 600 DEBIT 55,000 51,700 49,480 48,060 52,860 52,055 50,115 51,515 50,640 47,040 46,720 51,353 50,228 52,436 52,186 51,802 50,052 48,052 47,027 46,527 50,477 49,727 51,227 56,852 59,852 59,660 58,160 57,535 82,535 85,203 84,603 88,603 82,861 87,514 86,264 83,789 75,375 74,775 CREDIT 11 15 26 27 Mar 9 11 16 19 31 5,500 4,800 1,000 192 3,220 960 5,260 3,830 128 Accounts Receivable ACCOUNT DATE ITEM POST. REF. Oct 6 12 15 22 28 Nov 8 18 24 Dec 4 28 Jan 1 1 ACCOUNT 106 ACCOUNT NO. BALANCE DEBIT CREDIT 4,800 1,400 4,800 1,400 5,208 5,668 2,208 3,950 3,950 3,000 3,000 2,668 DEBIT CREDIT 4,800 6,200 1,400 0 5,208 10,876 8,668 12,618 8,668 5,668 2,668 0 106.1 Accounts Receivable-Alex's Engineering ACCOUNT NO. DATE Jan 11 Feb 11 ACCOUNT 80,275 75,475 74,475 74,283 77,503 76,543 81,803 77,973 77,845 ITEM POST. REF. BALANCE DEBIT CREDIT 5,500 DEBIT CREDIT 5,500 5,500 0 ACCOUNT NO. ACCOUNT Accounts Receivable-Wildcat Services DATE ITEM POST. REF. Mar 25 ACCOUNT Mar 24 POST. REF. Jan 1 Mar 30 DEBIT CREDIT Jan 13 20 22 POST. REF. DEBIT CREDIT 106.4 ACCOUNT NO. BALANCE DEBIT CREDIT 3,000 2,220 ITEM 106.3 ACCOUNT NO. 8,900 DEBIT CREDIT 3,000 5,220 Accounts Receivable-Liu Corp DATE CREDIT BALANCE 8,900 ITEM DEBIT 2,800 Accounts Receivable-IFM Co. DATE ACCOUNT CREDIT Accounts Receivable-Easy Leasing DATE ACCOUNT BALANCE DEBIT 2,800 POST. ITEM REF. 106.2 ACCOUNT NO. 106.5 ACCOUNT NO. BALANCE DEBIT CREDIT 5,200 500 4,700 DEBIT 5,200 4,700 0 CREDIT Accounts Receivable-Gomez Co. ACCOUNT DATE Jan ACCOUNT ITEM POST. REF. 1 9 2,668 Feb 23 Mar 9 DEBIT CREDIT 3,220 Jan 26 POST. REF. 106.7 DEBIT CREDIT 3,220 0 106.8 BALANCE DEBIT CREDIT 5,800 ITEM 2,668 0 ACCOUNT NO. DEBIT CREDIT 5,800 Accounts Receivable-Dream, Inc. DATE CREDIT BALANCE 3,220 POST. ITEM REF. DEBIT ACCOUNT NO. Accounts Receivable-KC, Inc. DATE ACCOUNT CREDIT Accounts Receivable-Delta Co. DATE ACCOUNT BALANCE DEBIT 2,668 POST. ITEM REF. 106.6 ACCOUNT NO. 106.9 ACCOUNT NO. BALANCE DEBIT CREDIT DEBIT CREDIT Merchandise Inventory ACCOUNT DATE ITEM POST. REF. Jan 7 13 15 20 24 26 26 Feb 3 23 Mar 25 30 31 BALANCE DEBIT CREDIT 5,800 3,560 600 58 496 9,000 4,640 90 2,660 2,002 1,100 90 Computer Supplies ACCOUNT POST. ITEM REF. DATE Oct 3 Nov 5 Dec 15 Dec 31 Mar 8 31 DATE DEBIT CREDIT 3,065 2,730 1,305 Oct 5 POST. REF. CREDIT 5,800 2,240 2,840 2,782 2,286 11,286 6,646 6,556 3,896 1,894 794 704 126 BALANCE 1,420 1,125 1,100 ITEM DEBIT ACCOUNT NO. Prepaid Insurance ACCOUNT 119 ACCOUNT NO. DEBIT CREDIT 1,420 2,545 3,645 580 3,310 2,005 128 ACCOUNT NO. BALANCE DEBIT 2,220 CREDIT DEBIT 2,220 CREDIT Dec 31 Mar 31 555 555 Prepaid Rent ACCOUNT DATE ITEM POST. REF. Oct 2 Dec 31 Jan 1 Mar 31 DATE Oct ACCOUNT BALANCE DEBIT 2,475 2,475 2,475 POST. REF. 1 CREDIT 3,300 825 3,300 825 163 BALANCE DEBIT CREDIT 8,000 POST. ITEM REF. DEBIT ACCOUNT NO. DEBIT CREDIT 8,000 Accum. Depr.-office equipment DATE 164 ACCOUNT NO. BALANCE DEBIT Dec 31 Mar 31 ACCOUNT CREDIT 3,300 ITEM 131 ACCOUNT NO. Office Equipment ACCOUNT 1,665 1,110 Computer Equipment CREDIT DEBIT 400 400 CREDIT 400 800 ACCOUNT NO. 167 DATE Oct ITEM POST. REF. 1 BALANCE DEBIT 20,000 DATE ITEM POST. REF. Oct Dec Jan Feb Mar 168 ACCOUNT NO. CREDIT DEBIT CREDIT 1,250 Accounts Payable DATE CREDIT BALANCE DEBIT Dec 31 ACCOUNT DEBIT 20,000 Accum. Depr.-computer equip ACCOUNT ACCOUNT CREDIT ITEM POST. REF. 3 8 15 7 20 24 26 3 8 19 Wages Payable 1,250 201 ACCOUNT NO. BALANCE DEBIT CREDIT DEBIT 1,420 CREDIT 1,420 0 1,100 6,900 1,100 604 9,604 1,100 3,830 0 1,420 1,100 5,800 5,800 496 9,000 8,504 2,730 3,830 ACCOUNT NO. 210 DATE ITEM POST. REF. BALANCE DEBIT Dec 31 Jan 1 Mar 31 ACCOUNT ITEM POST. REF. BALANCE DEBIT CREDIT DEBIT CREDIT 1,500 1,500 0 1,500 ITEM POST. REF. BALANCE DEBIT CREDIT DEBIT 83,000 14,248 25,000 4,800 POST. REF. CREDIT 83,000 97,248 90,148 115,148 110,348 7,100 ITEM 301 ACCOUNT NO. A. Lopez, Withdrawls Oct 31 Nov 30 Dec 31 31 Feb 15 Mar 31 236 ACCOUNT NO. A. Lopez, Capital DATE 500 0 875 875 Oct 1 Dec 31 31 Jan 5 Mar 31 ACCOUNT CREDIT 500 Dec 14 Jan 11 DATE DEBIT 500 Unearned Comp. Serv. Rev. DATE ACCOUNT CREDIT 302 ACCOUNT NO. BALANCE DEBIT CREDIT 3,600 2,000 1,500 7,100 4,800 4,800 DEBIT 3,600 5,600 7,100 0 4,800 0 CREDIT Computer Svcs. Revenue ACCOUNT DATE Oct Nov Dec Jan Mar ACCOUNT ITEM POST. REF. 6 12 28 2 8 24 20 31 11 16 16 24 31 BALANCE DEBIT Jan 20 CREDIT 4,800 6,200 11,408 16,041 21,709 25,659 31,284 0 7,000 11,000 16,260 25,160 0 31,284 7,000 4,000 5,260 8,900 25,160 ITEM 413 ACCOUNT NO. POST. REF. BALANCE DEBIT CREDIT DEBIT CREDIT 5,200 5,800 3,220 2,800 2,220 Sales Returns & Allowances DATE DEBIT 4,800 1,400 5,208 4,633 5,668 3,950 5,625 Jan 13 26 Feb 23 Mar 25 30 ACCOUNT CREDIT Sales DATE 403 ACCOUNT NO. POST. ITEM REF. 5,200 11,000 14,220 17,020 19,240 414 ACCOUNT NO. BALANCE DEBIT 500 CREDIT DEBIT CREDIT 500 ACCOUNT Sales Discounts DATE ITEM POST. REF. Jan 22 ACCOUNT Dec 31 31 Mar 31 31 DEBIT ITEM POST. REF. 502 ACCOUNT NO. BALANCE DEBIT CREDIT 3,560 4,640 2,660 2,002 1,100 90 POST. ITEM REF. CREDIT 47 DEBIT CREDIT 3,560 8,200 10,860 12,862 13,962 13,872 Depr. Exp.-Office Equipment DATE ACCOUNT CREDIT 47 Jan 13 26 Feb 23 Mar 25 30 31 ACCOUNT BALANCE DEBIT Cost of Goods Sold DATE 415 ACCOUNT NO. 612 ACCOUNT NO. BALANCE DEBIT CREDIT 400 400 400 Depr. Exp.-Computer Equip. 400 DEBIT CREDIT 400 0 400 0 ACCOUNT NO. 613 DATE ITEM POST. REF. Dec 31 31 Mar 31 31 DATE 1,250 1,250 1,250 1,250 ITEM POST. REF. Oct Nov Dec Dec 31 30 10 31 31 Jan 4 31 Feb 26 Mar 31 31 CREDIT 3,875 125 1,250 1,000 875 1,500 Dec 31 31 Mar 31 31 Dec 31 623 DEBIT CREDIT 875 2,625 3,375 3,875 0 125 1,375 2,375 1,500 0 637 ACCOUNT NO. BALANCE DEBIT CREDIT DEBIT CREDIT 555 0 555 0 555 555 555 Rent Expense DATE 1,250 0 1,250 0 555 POST. ITEM REF. CREDIT BALANCE DEBIT 875 1,750 750 500 POST. ITEM REF. DEBIT ACCOUNT NO. Insurance Expense DATE ACCOUNT CREDIT Wages Expense ACCOUNT ACCOUNT BALANCE DEBIT 640 ACCOUNT NO. BALANCE DEBIT 2,475 CREDIT DEBIT 2,475 CREDIT 31 Mar 31 31 2,475 2,475 2,475 Computer Supplies Exp. ACCOUNT DATE ITEM POST. REF. 3,065 3,065 1,305 1,305 ITEM POST. REF. Oct 20 Dec 2 31 Feb 5 Mar 31 DATE CREDIT 2,965 600 600 Nov 1 28 Dec 29 31 Feb 27 Mar 31 31 POST. REF. CREDIT 3,065 0 1,305 0 655 BALANCE DEBIT 1,940 1,025 ITEM DEBIT ACCOUNT NO. Mileage Expense ACCOUNT ACCOUNT CREDIT Advertising Expense DATE 652 ACCOUNT NO. BALANCE DEBIT Dec 31 31 Mar 31 31 ACCOUNT 0 2,475 0 DEBIT CREDIT 1,940 2,965 0 600 0 676 ACCOUNT NO. BALANCE DEBIT CREDIT 320 384 192 896 192 128 Miscellaneous Expense 320 DEBIT CREDIT 320 704 896 0 192 320 0 ACCOUNT NO. 677 DATE ITEM POST. REF. Nov 22 Dec 31 ACCOUNT CREDIT ITEM POST. REF. BALANCE DEBIT CREDIT 1,305 960 960 Income Summary Dec 31 31 31 31 Mar 31 31 POST. REF. 684 ACCOUNT NO. 805 500 ITEM CREDIT 250 0 250 Oct 17 Dec 3 31 Mar 11 31 DATE DEBIT 250 Repairs Expense-Computer DATE ACCOUNT BALANCE DEBIT DEBIT CREDIT 805 1,305 0 960 0 901 ACCOUNT NO. BALANCE DEBIT CREDIT 31,284 17,036 14,248 25,160 9,365 15,795 DEBIT CREDIT 31,284 14,248 0 25,160 15,795 0 Acct. Code Trial Balance Debit Credit Account 101 Cash 106 Accounts Receivable 126 Computer Supplies 128 Prepaid Insurance 131 Prepaid Rent 163 Office Equipment 164 Accum. Depr.-Office Equipment 167 Computer Equipment 168 Accum. Depr.-Computer Equipment 201 Accounts Payable 210 Wages Payable 236 Unearned computer services revenue 301 A. Lopez, Capital 302 A. Lopez, Withdrawls 403 Computer Services Revenue 612 Depr. Exp.-Office Equipment 613 Depr. Exp.-Computer Equipment 623 Wages Expense 637 Insurance Expense 640 Rent Expense 652 Computer Supplies Expense 655 Advertising Expense 676 Mileage Expense 677 Miscellaneous Expense 684 Repairs Expense-Computer $ 20,000 1,100 1,500 83,000 7,100 31,284 3,375 $ Acct. Code Account 101 Cash 106.2 Accounts Receivable-Wildcat Services 106.3 Accounts Receivable-Easy Leasing 58,160 5,668 3,645 2,220 3,300 8,000 2,965 896 250 1,305 116,884 $ 116,884 Trial Balance Debit Credit 77,845 2,800 8,900 106.4 Accounts Receivable-IFM Co. 106.8 Accounts Receivable-KC Inc. 119 Merchandise Inventory 126 Computer Supplies 128 Prepaid Insurance 131 Prepaid Rent 163 Office Equipment 164 Accum. Depr.-Office Equipment 167 Computer Equipment 168 Accum. Depr.-Computer Equipment 201 Accounts Payable 210 Wages Payable 301 A. Lopez, Capital 302 A. Lopez, Withdrawls 403 Computer Services Revenue 413 Sales 414 Sales Returns & Allowances 415 Sales Discounts 502 COGS 612 Depr. Exp.-Office Equipment 613 Depr. Exp.-Computer Equipment 623 Wages Expense 637 Insurance Expense 640 Rent Expense 652 Computer Supplies Expense 655 Advertising Expense 676 Mileage Expense 684 Repairs Expense-Computer 901 Income Summary 5,220 5,800 794 3,310 1,665 3,300 8,000 400 20,000 1,250 0 115,148 4,800 25,160 19,240 500 47 13,962 2,375 600 $ 320 960 161,198 $ 161,198 Instruction 8 A. Inventory Items Office Productivity Desktop Publishing Accounting Units 3 2 3 Total Following the lower of cost or market rule, Lopez will not need to adjust the reported inventory. Per Unit Cost Market 76 103 90 74 100 96 Inventory Items Office Productivity Desktop Publishing Accounting Total Units 3 2 3 Per Unit Cost Market 76 103 90 74 100 96 Applying lower of cost or market to each product causes the value to go below cost. Lopez should adjust the inventory value from $704 to $698. B. Inventory = COGS/Avg. Inventory Avg. Inventory Beg. Inventory + Ending Inventory/2 Inventory = $704 0+$704=$704 14052/352=39.92 rounded up = 40 Inventory turnover = 40 Ending Inventory/COGS $704 / $14,052 = 0.05 0.05 x 365 = 18.286 rounded up = 18.3 Success Systems inventory turnover = 40 Competitors inventory turnover = 10 Success Systems's performance was better than their competitors. Success Systems days' sales in inventory = 18.3 Competitors days' sales in inventory = 29 Success Systems days' sales in inventory was better than their competitors. Instruction 9 1 to 1 Pros Cons 4 to 1 Pros If the company suffered a loss, the financial burden w If the new partner invests the same capital of $90,14 The new partner will get half of any profits. The new partner will have an equal say in how the b If the company suffered a loss, Adriana Lopez will a Adriana Lopez will be able to keep a larger portion o Cons Adriana Lopez may limit the amount of interested in 4. What would be the new partner's equity percen 90,148 +22,537 = 112,685 total equity 22,537/112,685 = 20% Instruction 10 2. Proposal a. As an investor, Cicely will h b. A preferred shareholder doe c. The bank does not have any 3. I think Adriana should get the b Instruction 11 1. Total Equity x debt-to-equity ratio 129,034 x 80% = 103,227 103,227 - 875 = 102,352 is the maximum am 2. (a) by debt (total liabilities + maximum amo (Total Equity + maximum amo ($875 + $102,352) / (129,034 + 102,352) 103,227 / 232,261 = 0.444443966 = 44.4% (b) by equity (total assets + maximum amou $129,034 / ($129,909 + $102,352) $129,034 / $232,261 = 0.555556033 = 55.6 3. Adriana Lopez must be able to earn enough If she secures a loan she must be clear on w Instruction 13 Success Systems Accounting Worksheet December 31, 2009 Adjusting Entries Debit Credit Adjusted Trial Balance Debit Credit $ 3,065 555 2,475 58,160 5,668 580 1,665 825 8,000 400 400 20,000 1,250 1,250 1,100 500 1,500 83,000 500 7,100 31,284 400 1,250 500 555 2,475 3,065 $ 8,245 $ 8,245 Adjusting Entries Debit Credit $ 400 1,250 3,875 555 2,475 3,065 2,965 896 250 1,305 119,034 $ 119,034 Success Systems Accounting Worksheet March 31, 2010 Adjusted Trial Balance Debit Credit 77845 2800 8900 5220 5800 704 2005 1110 825 8000 90 1305 555 2475 800 20000 1250 400 875 2500 0 875 115148 4800 25160 19240 90 400 1250 875 555 2475 1305 $ 6,950 $ Total Cost 6,950 $ 500 47 14052 400 1250 3250 555 2475 1305 600 320 960 163,723 $ Total Market 228 206 270 $704 222 200 288 $710 76X3 74x3 103x2 100x2 90x3 96x3 163,723 Total Cost Total Market 228 206 270 $704 LCM Applied 222 200 288 $710 $ 222 206 270 698 d a loss, the financial burden would be eqully shared by both partners ts the same capital of $90,148 it will double the current equity. et half of any profits. ave an equal say in how the business is run and this may lead to arguments. d a loss, Adriana Lopez will absorb a larger portion of the loss but will not have to bear the full amount. able to keep a larger portion of her profits. mit the amount of interested investors. new partner's equity percentage? 685 total equity s an investor, Cicely will have an equal say in how the business is run. The sisters may or may not agree on how to run the company. Adrian preferred shareholder does not have any say in how the business is run but there is an expectation of dividends on the investment of $86,00 he bank does not have any say in how the business is run. There is the required monthly payment of $1,000 so the business will need to alloc nk Adriana should get the bank loan. She will be able to retain full control of her company and all decisions will be her own. Bank loans ca -to-equity ratio 2,352 is the maximum amount that Success Systems could borrow from this bank. abilities + maximum amount that could be borrowed from the bank) Equity + maximum amount that could be borrowed from the bank) / (129,034 + 102,352) = 0.444443966 = 44.4% total equity assets + maximum amount that could be borrowed from the bank) 09 + $102,352) 1 = 0.555556033 = 55.6% st be able to earn enough income to repay the loan. If she is unable to repay it, will she may not be able to negotiate at a reasonab n she must be clear on what she will be using the money for. ms sheet 009 Income Statement Debit Credit Revenue Computer Services Revenue Expenses Depr. Exp.-Office Equip. Depr. Exp.-Computer Equip. Wages Expense Insurance Expense Rent Expense Computer Supplies Expense Advertising Expense Mileage Expense Miscellaneous Expense Repairs Expense-Computer Total Expenses Net Income ms sheet 0 $ 31,284 $ 17,036 14,248 400 1,250 3,875 555 2,475 3,065 2,965 896 250 1,305 Income Statement Debit Credit Revenue Computer Services Revenue Net Sales $ 25,160 18,693 Total Revenues Expenses COGS Depr. Exp.-Office Equip. Depr. Exp.-Computer Equip. Wages Expense Insurance Expense Rent Expense Computer Supplies Expense Advertising Expense Mileage Expense Repairs Expense-Computer Total Expenses Net Income 43,853 14,052 400 1,250 3,250 555 2,475 1,305 600 320 960 $ 25,167 18,686 may or may not agree on how to run the company. Adriana does not have to pay Cicely back for her investment. an expectation of dividends on the investment of $86,000 at 7%. thly payment of $1,000 so the business will need to allocate funds for the loan. If the compay cannot pay the monthly payment there will be ompany and all decisions will be her own. Bank loans can be renegotiated if she is unable to make the $1,000 monthly payment. Plus, the i it, will she may not be able to negotiate at a reasonable rate as her credit stability is now in question. Balance Sheet Debit Credit Assets Cash Accounts Receivable Computer Supplies Prepaid Insurance Prepaid Rent Office Equipment Accum. Depr.-Office Equipment Computer Equipment Accum. Depr.-Computer Equipment Total Assets 58,160 5,668 580 1,665 825 8,000 -400 20,000 -1,250 7,600 $ 18,750 93,248 Liabilities Accounts Payable Wages Payable Unearned Computer Services Revenue Total Liabilities 1,100 500 1,500 3,100 Equity A. Lopez, Capital Total Liabilities and Equity $ 90,148 93,248 Balance Sheet Debit Credit Assets Cash Accounts Receivable-Wildcat Services 77845 2,800 Accounts Receivable-Easy Leasing Accounts Receivable-IFM Co. Accounts Receivable-KC Inc. Merchandise Inventory Computer Supplies Prepaid Insurance Prepaid Rent Office Equipment Accum. Depr.-Office Equipment Computer Equipment Accum. Depr.-Computer Equipment Total Assets 8,900 5,220 5,800 704 2005 1110 825 8000 -800 20000 -2500 7200 $ 17500 129,909 Liabilities Accounts Payable Wages Payable Unearned Computer Services Revenue Total Liabilities 875 875 Equity A. Lopez, Capital Retained Earnings Total Liabilities and Equity $ 108000 21034 129,909 ay Cicely back for her investment. n. If the compay cannot pay the monthly payment there will be additional late fees. she is unable to make the $1,000 monthly payment. Plus, the interest on bank loans is dedcutible on her income taxes it stability is now in question. Income Statement For Three Months Ended March 31, 2010 Debit Revenue Sales COGS Total Revenues Operating Expenses COGS Depr. Exp.-Office Equip. Depr. Exp.-Computer Equip. Wages Expense Insurance Expense Rent Expense Computer Supplies Expense Advertising Expense Mileage Expense Repairs Expense-Computer Total Expenses Net Income Credit $ 18,693 18,693 37,386 cutible on her income taxes