(This comprehensive problem starts in this chapter and continues in Chapters 3, 4, and 5. Because of its length CUMULATIVE COMPREHENSION PROBLEM: ECHO SYSTEMS this problem is most easily solved if you use the Working Papers that accompany this text.) On October 1, 2020, Mary Graham organized a computer service company called Echo Systems. Echo is organ- ized as a sole proprietorship and will provide consulting services, computer system installations, and custom program development. Graham has adopted the calendar year for reporting, and expects to prepare the com- pany's first set of financial statements as of December 31, 2020. The initial chart of accounts for the account- ing system includes these items: Account Number Account Name Account Number Account Name 101 106 126 128 131 163 167 201 Cash Accounts Receivable Computer Supplies Prepaid Insurance Prepaid Rent Office Equipment Computer Equipment Accounts Payable 301 302 403 623 655 676 684 699 Mary Graham, Capital Mary Graham, Withdrawals Computer Services Revenue Wages Expense Advertising Expense Mileage Expense Repairs Expense. Computer Charitable Donations Expense Part A: CHECK FIGURES: 4. Total Dr.= $159,450: Profit = $8.920, Total assets = $145,720 Required 1. Set up balance column accounts based on the chart of accounts provided. 2. Prepare journal entries to record each of the following October transactions. 3. Post the October entries. 4. Prepare a trial balance at October 31, 2020. 5. Prepare an income statement and a statement of changes in equity for the month ended October 31, 2020, as well as a balance sheet at October 31, 2020. 14 If students have not purchased the Working Paper package, the Working Papers for the Serial Problem CHAPTER 2 Analyzing and Recording Transactions Oct 1 2 3 5 6 Graham invested $90.000 cash. $36.000 computer system, and $18,000 of office equipment in the business Paid rent in advance of $9.000 Purchased computer supplies on credit for $2.640 trom Atom Office Products Pald 34.320 cash for one year's premium on a property and by insurance policy Bilted Capital Leasing 56.600 for installing a new computer Paid for the computer supplies purchased from Aborce Products Hired Carly Smith as a part time for $200 per day, as needed Buled Capital Leasing another $2.400 for computer services rendered Received $6.600 from Capital Leasing on its account Paid $1.410 to repair computer equipment damaged when moving to the newice Paid $3.720 for an advertisement in the local newspaper Received $2.400 from Capital Leasing on its account Billed Decker Company $6,450 for services Paid Carly Smith for seven days' work, Withdrew $7.200 cash from the business for personal use. 10 12 15 17 20 22 28 31 31 SIDE Part B: CHECK FIGURES: 8. Total Dr. $184,9509. Profit $27,920: Total assets = $161120 Required 6. Prepare journal entries to record each of the following November transactions. 7. Post the November entries. 8. Prepare a trial balance at November 30, 2020. 9. Prepare an income statement and a statement of changes in equity for the two months ended November 30, 2020, as well as a balance sheet at November 30, 2020. Nov. 1 2 5 8 13 18 22 24 25 28 30 30 Reimbursed Graham's business automobile expense for 1.000 kilometres at $1.00 per kilometre Received $9.300 cash from Elite Corporation for computer services rendered Purchased $1.920 of computer supplies for cash from Abbott Office Products Billed Fostek Co. $8,700 for computer services rendered. Notified by Alamo Engineering Co that Echo's bid of $7,500 for an upcoming project was accepted Received $3,750 from Decker Company against the bill dated October 28 Donated $1.500 to the United Way in the company's name. Completed work for Alamo Engineering Co. and sent a bill for $7,500 Sent another bill to Decker Company for the past due amount of $2,700. Reimbursed Graham's business automobile expense for 1.200 kilometres a $1.00 per kilometre. Pald Carly Smith for 14 days' work. Withdrew $3,600 cash from the business for personal use
