Question
Serial Problem Business Solutions LO P1, P2, P3, P4, P5, P6 After the success of the companys first two months, Santana Rey continues to operate
Serial Problem Business Solutions LO P1, P2, P3, P4, P5, P6
After the success of the companys first two months, Santana Rey continues to operate Business Solutions. The November 30, 2019, unadjusted trial balance of Business Solutions (reflecting its transactions for October and November of 2019) follows.
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 depreciationOffice equipment | $ | 0 | |||
167 | Computer equipment | 20,000 | ||||
168 | Accumulated depreciationComputer 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 expenseOffice equipment | 0 | ||||
613 | Depreciation expenseComputer 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 expenseComputer | 805 | ||||
Totals | $ | 98,659 | $ | 98,659 | ||
Business Solutions had the following transactions and events in December 2019.
Dec. | 2 | Paid $1,025 cash to Hillside Mall for Business Solutions share of mall advertising costs. | |
3 | Paid $500 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 $125 per day. | ||
14 | Notified by Alexs Engineering Co. that Business Solutions bid of $7,000 on a proposed project has been accepted. Alexs 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 $0.32 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 $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 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 have 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 from Requirement 1 and adjusting entries from Requirement 2A. After completing Requirement 7, post the closing entries to the general ledger accounts. 3. Prepare an adjusted trial balance as of December 31, 2019. 4. Prepare an income statement for the three months ended December 31, 2019. 5. Prepare a statement of retained earnings for the three months ended December 31, 2019. 6. Prepare a balance sheet as of December 31, 2019. 7. Record the necessary closing entries as of December 31, 2019 and then post the closing entries to the general ledger in Requirement 2B. 8. Prepare a post-closing trial balance as of December 31, 2019.
Post the journal entries to record each of the December transactions from Requirement 1 and adjusting entries from Requirement 2A. After completing Requirement 7, post the closing entries to the general ledger accounts. 101: Cash Debit 106: Accounts Receivable Debit Credit Date Credit Balance Date Balance Dec 01 38,264 Dec. 01 12,618 126: Computer Supplies Debit Credit 128: Prepaid Insurance Debit Credit Date Date Balance 2,545 Balance 2,220 Dec 01 Dec. 01 131: Prepaid Rent Debit Credit 163: Office Equipment Debit Credit Date Date Balance 3,300 Balance 8,000 Dec. 01 Dec. 01 164: Accumulated DepreciationOffice Equipment Date Debit Credit Balance 167: Computer Equipment Debit Credit Date Dec. 01 Balance 20,000 Dec. 01 0 168: Accumulated Depreciation-Computer Equipment Date Debit Credit Balance Dec 01 201: Accounts Payable Debit Credit Date Balance 0 Dec. 01 0 210: Wages Payable Debit Credit Date Balance 236: Unearned Computer Services Revenue Date Debit Credit Balance Dec. 01 Dec. 01 0 0 307: Common Stock Debit Credit 318: Retained Earnings Debit Credit Date Balance Balance Date Dec. 01 Dec. 01 73,000 0 319: Dividends Debit Credit 403: Computer Services Revenue Debit Credit Date Date Balance 5,600 Balance 25,659 Dec. 01 Dec. 01 612: Depreciation Expense-Office Equipment Date Debit Credit Balance 613: Depreciation Expense-Computer Equipment Date Debit Credit Balance Dec. 01 Dec. 01 0 0 623: Wages Expense Debit Credit 637: Insurance Expense Debit Credit Date Balance Date Balance Dec 01 2,625 Dec. 01 0 623: Wages Expense Debit Credit 637: Insurance Expense Debit Credit Date Balance Date Balance Dec 01 2,625 Dec. 01 0 640: Rent Expense Debit Credit 652: Computer Supplies Expense Debit Credit Date Balance Balance Dec. 01 Date Dec. 01 0 0 655: Advertising Expense Debit Credit 676: Mileage Expense Debit Credit Date Balance 1,728 Date Dec. 01 Balance 704 Dec 01 677: Miscellaneous Expense 684: Repairs Expense Computer 677: Miscellaneous Expense Debit Credit 684: Repairs Expense-Computer Debit Credit Date Balance Date Balance Dec. 01 250 Dec. 01 805 901: Income Summary Debit Credit Date Balance Req 2A Req3 >
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