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 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.

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 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.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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 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.

Req 1
Req 2A
Req 2B
Req 3
Req 4
Req 5
Req 6
Req 7
Req 8
Prepare an income statement for the three months ended December 31, 2019.
BUSINESS SOLUTIONS
Income Statement
For Three Months Ended December 31, 2019
Revenue
Expenses
Total expenses
< Req 3
Req 5 >
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Req 1
Req 2A
Req 2B
Req 3
Req 4
Req 5
Req 6
Req 7
Req 8
Prepare a statement of retained earnings for the three months ended December 31, 2019.
BUSINESS SOLUTIONS
Statement of Retained Earnings
For Three Months Ended December 31, 2019
Retained earnings, October 1, 2019
Retained earnings, December 31, 2019
$
Req 4
Req 6 >

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