You have been asked to prepare the financial statements for Computer Solutions for the year ended December $31,2023.$ The following additional facts are collected for use in making adjusting entries prior to preparing financial statements at year end $($Round all calculations to the nearest dollar$)$:

a$.$ Adjust interest expense on the mortgage if necessary to reflect the proper expense for $2023.$ Remember that mortgage was taken out on October $1,2023.$

b$.$ Customer note receivable dated November $14,5\%$ interest due at maturity. $($Use $360$ day year.$)$

c$.$ Lease with Sushi Coma began November $1,2023.$

d$.$ Prepaid insurance balance at December $31,2022$ was $$1,125$ representing general liability insurance for January through March $2023.$ The general liability annual premium of $$5,052$ was paid on April $1,2023$ and debited to prepaid insurance account. One year$$s premium was paid on October $4,2023,$ for property and liability insurance policy that began October $1,2023.$

e$.$ Received a statement from Nusbaum Realty indicating Computer Solutions had paid rent of $$33,750$ for $2023.$

f$.$ R$.$ Santana estimates that $5\%$ of accounts receivable are uncollectible at December $31,2023.$ To comply with GAAP Computer Solutions has decided to use the allowance method of recording bad debts. $($Use AR balance from Part $3$ which should equal $$21,260$ to calculate allowance balance$)$

g$.$ On January $2,2024,$ R$.$ Santana billed Mason, Inc. $$8,750$ for computer services completed on December $31,2023.$

h$.$ Computer supplies of $$453$ are on hand at December $31,2023.$

i$.$ A physical count of merchandise inventory was completed the morning of January $2,2024,$ showing inventory on hand of $$6,092.$

j$.$ The following information is available relating to fixed assets at $12/31/23$:

Computer Equipment: Acquired $10/1/21$ at a cost of $$22,000,$ $$0$ residual value expected, expected life of $5$ years, straight$-$line method of depreciation

Office Equipment: Acquired $10/1/21$ at a cost of $$5,000,$ $$0$ residual value expected, expected life of $10$ years, straight$-$line method of depreciation. Acquired $10/1/23$ at a cost of $$47,070$ and an expected residual value of $$1,070,$ straight$-$line method of depreciation over a $10$ year useful life.

Building: Acquired $10/1/23$ at a cost of$$266,730$ and a residual value of $$50,730.$ Useful life is estimated at $40$ years and the straight$-$line method of depreciation is used by Computer Solutions.

Pay careful attention to date property acquired and number of months in service during $2023!$

Required:

$1.$ Unadjusted December $31,2023,$ balances include:

$$ Cash $99,391$

$$ Accounts Receivable $21,260$

$$ Inventory $6,427$

$$ Accounts Payable $5,980$

$$ Computer Services Revenue $146,375$

$$ Sales $155,548$

$$ Cost of Goods Sold $92,094$

$2.(20$ points$)$ Using the information provided, prepare the adjusting entries for Computer Solutions at December $31,2023.$

$$ Use the following naming convention for your adjusting entries: AJE $1,$ AJE $2,$ etc.

$$ Make sure you use the correct date!

$3.(5$ points$)$ Run a statement of Cash Flows for the year ending December $31,2023,$ and answer the following questions using Word.

$$ Do you see a problem with this statement? Provide support for your answer to receive credit.

$$ What was the change in the cash balance in $2023?$

$$ What assumption is QuickBooks making relating this statement?

$4.$ Upload the following PDF reports from QuickBooks for grading:

$$ December $31,2023$ Journal

$$ Balance Sheet at December $31,2023($Adjusted net income at $12/31/22$ is $$22,017)$

$$ Profit and Loss Statement for January $$ December $2023$

$$ Trial Balance as of December $31,2023$

$$ Statement of Cash Flows for January $1,2023$ December $31,2023$

$$ WORD document with answers relating to your Statement of Cash Flows