Question
On October 1, 2017, Santana Rey launched a computer services company called Business Solutions, which provides consulting services, computer system installations, and custom program development.
On October 1, 2017, Santana Rey launched a computer services company called Business Solutions, which provides consulting services, computer system installations, and custom program development. Rey adopts the calendar year for reporting purposes and expects to prepare the companys first set of financial statements on December 31, 2017. The companys initial chart of accounts follows.
Account | No. | Account | No. | |
Cash | 101 | Common Stock | 307 | |
Accounts Receivable | 106 | Dividends | 319 | |
Computer Supplies | 126 | Computer Services Revenue | 403 | |
Prepaid Insurance | 128 | Wages Expense | 623 | |
Prepaid Rent | 131 | Advertising Expense | 655 | |
Office Equipment | 163 | Mileage Expense | 676 | |
Computer Equipment | 167 | Miscellaneous Expenses | 677 | |
Accounts Payable | 201 | Repairs ExpenseComputer | 684 | |
Oct. | 1 | S. Rey invested $46,000 cash, a $23,000 computer system, and $9,000 of office equipment in the company in exchange for its common stock. | ||
2 | The company paid $3,300 cash for four months' rent. (Hint: Debit Prepaid Rent for $3,300.) | |||
3 | The company purchased $1,340 of computer supplies on credit from Harris Office Products. | |||
5 | The company paid $1,740 cash for one year's premium on a property and liability insurance policy. (Hint: Debit Prepaid Insurance for $1,740.) | |||
6 | The company billed Easy Leasing $5,100 for services performed in installing a new Web server. | |||
8 | The company paid $1,340 cash for the computer supplies purchased from Harris Office Products on October 3. | |||
10 | The company hired Lyn Addie as a part-time assistant for $115 per day, as needed. | |||
12 | The company billed Easy Leasing another $2,000 for services performed. | |||
15 | The company received $5,100 cash from Easy Leasing as partial payment on its account. | |||
17 | The company paid $765 cash to repair computer equipment that was damaged when moving it. | |||
20 | The company paid $1,688 cash for advertisements published in the local newspaper. | |||
22 | The company received $2,000 cash from Easy Leasing on its account. | |||
28 | The company billed IFM Company $5,208 for services performed. | |||
31 | The company paid $805 cash for Lyn Addies wages for seven days' work. | |||
31 | The company paid $2,600 cash in dividends. | |||
Nov. | 1 | The company reimbursed S. Rey in cash for business automobile mileage allowance (Rey logged 1,000 miles at $0.27 per mile). | ||
2 | The company received $4,933 cash from Liu Corporation for computer services performed. | |||
5 | The company purchased computer supplies for $1,080 cash from Harris Office Products. | |||
8 | The company billed Gomez Co. $6,068 for services performed. | |||
13 | The company received notification from Alexs Engineering Co. that Business Solutionss bid of $4,350 for an upcoming project was accepted. | |||
18 | The company received $1,708 cash from IFM Company as partial payment of the October 28 bill. | |||
22 | The company donated $210 cash to the United Way in the company's name. | |||
24 | The company completed work and sent a bill for $4,350. to Alexs Engineering Co. | |||
25 | The company sent another bill to IFM Company for the past-due amount of $3,500. | |||
28 | The company reimbursed S. Rey in cash for business automobile mileage (1,200 miles at $0.27 per mile). | |||
30 | The company paid $1,610 cash for Lyn Addie's wages for 14 days' work. | |||
30 | The company paid $1,600 cash in dividends. |
Required:
1. Prepare journal entries to record each of the above transactions for Business Solutions. 2. Prepare ledger accounts (in balance column format) and post the journal entries from requirement 1 to them. 3. Prepare a trial balance as of the end of November.
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