After the success of the company’s 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 $ 38,364       106 Accounts receivable   12,818       126 Computer supplies   2,545       128 Prepaid insurance   1,920       131 Prepaid rent   2,960       163 Office equipment   8,000       164 Accumulated depreciation—Office equipment       $ 0 167 Computer equipment   23,200       168 Accumulated depreciation—Computer equipment         0 201 Accounts payable         0 210 Wages payable         0 236 Unearned computer services revenue         0 307 Common stock         68,000 318 Retained earnings         0 319 Dividends   5,700       403 Computer services revenue         33,069 612 Depreciation expense—Office equipment   0       613 Depreciation expense—Computer equipment   0       623 Wages expense   2,275       637 Insurance expense   0       640 Rent expense   0       652 Computer supplies expense   0       655 Advertising expense   1,658       676 Mileage expense   634       677 Miscellaneous expenses   210       684 Repairs expense—Computer   785         Totals $ 101,069   $ 101,069     Business Solutions had the following transactions and events in December 2019.      Dec. 2   Paid $970 cash to Hillside Mall for Business Solutions’ share of mall advertising costs.   3   Paid $470 cash for minor repairs to the company’s computer.   4   Received $4,650 cash from Alex’s Engineering Co. for the receivable from November.   10   Paid cash to Lyn Addie for six days of work at the rate of $120 per day.   14   Notified by Alex’s Engineering Co. that Business Solutions’ bid of $7,700 on a proposed project has been accepted. Alex’s paid a $2,000 cash advance to Business Solutions.   15   Purchased $1,300 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 $5,875 cash.   22–26   Took the week off for the holidays.   28   Received $3,600 cash from Gomez Co. on its receivable.   29   Reimbursed S. Rey for business automobile mileage (500 miles at $0.31 per mile).   31   The company paid $1,100 cash in dividends.           The following additional facts are collected for use in making adjusting entries prior to preparing financial statements for the company’s first three months.   The December 31 inventory count of computer supplies shows $630 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 $120 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 lif

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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After the success of the company’s 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 $ 38,364      
106 Accounts receivable   12,818      
126 Computer supplies   2,545      
128 Prepaid insurance   1,920      
131 Prepaid rent   2,960      
163 Office equipment   8,000      
164 Accumulated depreciation—Office equipment       $ 0
167 Computer equipment   23,200      
168 Accumulated depreciation—Computer equipment         0
201 Accounts payable         0
210 Wages payable         0
236 Unearned computer services revenue         0
307 Common stock         68,000
318 Retained earnings         0
319 Dividends   5,700      
403 Computer services revenue         33,069
612 Depreciation expense—Office equipment   0      
613 Depreciation expense—Computer equipment   0      
623 Wages expense   2,275      
637 Insurance expense   0      
640 Rent expense   0      
652 Computer supplies expense   0      
655 Advertising expense   1,658      
676 Mileage expense   634      
677 Miscellaneous expenses   210      
684 Repairs expense—Computer   785      
  Totals $ 101,069   $ 101,069
 

 

Business Solutions had the following transactions and events in December 2019.   

 

Dec. 2   Paid $970 cash to Hillside Mall for Business Solutions’ share of mall advertising costs.
  3   Paid $470 cash for minor repairs to the company’s computer.
  4   Received $4,650 cash from Alex’s Engineering Co. for the receivable from November.
  10   Paid cash to Lyn Addie for six days of work at the rate of $120 per day.
  14   Notified by Alex’s Engineering Co. that Business Solutions’ bid of $7,700 on a proposed project has been accepted. Alex’s paid a $2,000 cash advance to Business Solutions.
  15   Purchased $1,300 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 $5,875 cash.
  22–26   Took the week off for the holidays.
  28   Received $3,600 cash from Gomez Co. on its receivable.
  29   Reimbursed S. Rey for business automobile mileage (500 miles at $0.31 per mile).
  31   The company paid $1,100 cash in dividends.
       

 

The following additional facts are collected for use in making adjusting entries prior to preparing financial statements for the company’s first three months.
 

  1. The December 31 inventory count of computer supplies shows $630 still available.
  2. Three months have expired since the 12-month insurance premium was paid in advance.
  3. As of December 31, Lyn Addie has not been paid for four days of work at $120 per day.
  4. The computer system, acquired on October 1, is expected to have a four-year life with no salvage value.
  5. The office equipment, acquired on October 1, is expected to have a five-year life with no salvage value.
  6. 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.

319: Dividends
403: Computer Services Revenue
Date
Debit
Credit
Balance
Date
Debit
Credit
Balance
Dec. 01
5,700
Dec. 01
33,069
612: Depreciation Expense-Office Equipment
613: Depreciation Expense-Computer Equipment
Date
Debit
Credit
Balance
Date
Debit
Credit
Balance
Dec. 01
Dec. 01
623: Wages Expense
637: Insurance Expense
Date
Debit
Credit
Balance
Date
Debit
Credit
Balance
Dec. 01
2,275
Dec. 01
640: Rent Expense
652: Computer Supplies Expense
Date
Debit
Credit
Balance
Date
Debit
Credit
Balance
Dec. 01
Dec. 01
Transcribed Image Text:319: Dividends 403: Computer Services Revenue Date Debit Credit Balance Date Debit Credit Balance Dec. 01 5,700 Dec. 01 33,069 612: Depreciation Expense-Office Equipment 613: Depreciation Expense-Computer Equipment Date Debit Credit Balance Date Debit Credit Balance Dec. 01 Dec. 01 623: Wages Expense 637: Insurance Expense Date Debit Credit Balance Date Debit Credit Balance Dec. 01 2,275 Dec. 01 640: Rent Expense 652: Computer Supplies Expense Date Debit Credit Balance Date Debit Credit Balance Dec. 01 Dec. 01
Date
Debit
Credit
Balance
Date
Debit
Credit
Balance
Dec. 01
1,658
Dec. 01
634
677: Miscellaneous Expense
684: Repairs Expense-Computer
Date
Debit
Credit
Balance
Date
Debit
Credit
Balance
Dec. 01
210
Dec. 01
785
901: Income Summary
Date
Debit
Credit
Balance
Req 2A
Req 3
Prov
1 of ?
Noxt
Transcribed Image Text:Date Debit Credit Balance Date Debit Credit Balance Dec. 01 1,658 Dec. 01 634 677: Miscellaneous Expense 684: Repairs Expense-Computer Date Debit Credit Balance Date Debit Credit Balance Dec. 01 210 Dec. 01 785 901: Income Summary Date Debit Credit Balance Req 2A Req 3 Prov 1 of ? Noxt
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