After the success of the company’s first two months, Santana Rey continues to operate Business Solutions. The November 30, 2020, unadjusted trial balance of Business Solutions (reflecting its transactions for October and November of 2020) follows. Number Account Title Debit Credit 101 Cash $ 38,764 106 Accounts receivable 12,818 126 Computer supplies 2,545 128 Prepaid insurance 1,980 131 Prepaid rent 2,940 163 Office equipment 8,800 164 Accumulated depreciation—Office equipment $ 0 167 Computer equipment 23,600 168 Accumulated depreciation—Computer equipment 0 201 Accounts payable 0 210 Wages payable 0 236 Unearned computer services revenue 0 307 Common stock 70,000 318 Retained earnings 0 319 Dividends 6,100 403 Computer services revenue 33,414 612 Depreciation expense—Office equipment 0 613 Depreciation expense—Computer equipment 0 623 Wages expense 2,600 637 Insurance expense 0 640 Rent expense 0 652 Computer supplies expense 0 655 Advertising expense 1,668 676 Mileage expense 624 677 Miscellaneous expenses 180 684 Repairs expense—Computer 795 Totals $ 103,414 $ 103,414 Business Solutions had the following transactions and events in December 2020. December 2 Paid $925 cash to Hillside Mall for Business Solutions's share of mall advertising costs. December 3 Paid $450 cash for minor repairs to the company’s computer. December 4 Received $4,150 cash from Alex’s Engineering Co. for the receivable from November. December 10 Paid cash to Lyn Addie for six days of work at the rate of $120 per day. December 14 Notified by Alex’s Engineering Company that Business Solutions's bid of $7,300 on a proposed project has been accepted. Alex’s paid a $2,200 cash advance to Business Solutions. December 15 Purchased $1,200 of computer supplies on credit from Harris Office Products. December 16 Sent a reminder to Gomez Company to pay the fee for services recorded on November 8. December 20 Completed a project for Liu Corporation and received $5,675 cash. December 22-26 Took the week off for the holidays. December 28 Received $3,000 cash from Gomez Company on its receivable. December 29 Reimbursed S. Rey for business automobile mileage (400 miles at $0.30 per mile). December 31 The company paid $1,300 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 $600 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, 2020.

After the success of the company’s first two months, Santana Rey continues to operate Business Solutions. The November 30, 2020, unadjusted trial balance of Business Solutions (reflecting its transactions for October and November of 2020) follows. Number Account Title Debit Credit 101 Cash $ 38,764 106 Accounts receivable 12,818 126 Computer supplies 2,545 128 Prepaid insurance 1,980 131 Prepaid rent 2,940 163 Office equipment 8,800 164 Accumulated depreciation—Office equipment $ 0 167 Computer equipment 23,600 168 Accumulated depreciation—Computer equipment 0 201 Accounts payable 0 210 Wages payable 0 236 Unearned computer services revenue 0 307 Common stock 70,000 318 Retained earnings 0 319 Dividends 6,100 403 Computer services revenue 33,414 612 Depreciation expense—Office equipment 0 613 Depreciation expense—Computer equipment 0 623 Wages expense 2,600 637 Insurance expense 0 640 Rent expense 0 652 Computer supplies expense 0 655 Advertising expense 1,668 676 Mileage expense 624 677 Miscellaneous expenses 180 684 Repairs expense—Computer 795 Totals $ 103,414 $ 103,414 Business Solutions had the following transactions and events in December 2020. December 2 Paid $925 cash to Hillside Mall for Business Solutions's share of mall advertising costs. December 3 Paid $450 cash for minor repairs to the company’s computer. December 4 Received $4,150 cash from Alex’s Engineering Co. for the receivable from November. December 10 Paid cash to Lyn Addie for six days of work at the rate of $120 per day. December 14 Notified by Alex’s Engineering Company that Business Solutions's bid of $7,300 on a proposed project has been accepted. Alex’s paid a $2,200 cash advance to Business Solutions. December 15 Purchased $1,200 of computer supplies on credit from Harris Office Products. December 16 Sent a reminder to Gomez Company to pay the fee for services recorded on November 8. December 20 Completed a project for Liu Corporation and received $5,675 cash. December 22-26 Took the week off for the holidays. December 28 Received $3,000 cash from Gomez Company on its receivable. December 29 Reimbursed S. Rey for business automobile mileage (400 miles at $0.30 per mile). December 31 The company paid $1,300 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 $600 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, 2020.

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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Number	Account Title	Debit	Credit
101	Cash	$ 38,764
106	Accounts receivable	12,818
126	Computer supplies	2,545
128	Prepaid insurance	1,980
131	Prepaid rent	2,940
163	Office equipment	8,800
164	Accumulated depreciation—Office equipment		$ 0
167	Computer equipment	23,600
168	Accumulated depreciation—Computer equipment		0
201	Accounts payable		0
210	Wages payable		0
236	Unearned computer services revenue		0
307	Common stock		70,000
318	Retained earnings		0
319	Dividends	6,100
403	Computer services revenue		33,414
612	Depreciation expense—Office equipment	0
613	Depreciation expense—Computer equipment	0
623	Wages expense	2,600
637	Insurance expense	0
640	Rent expense	0
652	Computer supplies expense	0
655	Advertising expense	1,668
676	Mileage expense	624
677	Miscellaneous expenses	180
684	Repairs expense—Computer	795
	Totals	$ 103,414	$ 103,414

Business Solutions had the following transactions and events in December 2020.

December 2	Paid $925 cash to Hillside Mall for Business Solutions's share of mall advertising costs.
December 3	Paid $450 cash for minor repairs to the company’s computer.
December 4	Received $4,150 cash from Alex’s Engineering Co. for the receivable from November.
December 10	Paid cash to Lyn Addie for six days of work at the rate of $120 per day.
December 14	Notified by Alex’s Engineering Company that Business Solutions's bid of $7,300 on a proposed project has been accepted. Alex’s paid a $2,200 cash advance to Business Solutions.
December 15	Purchased $1,200 of computer supplies on credit from Harris Office Products.
December 16	Sent a reminder to Gomez Company to pay the fee for services recorded on November 8.
December 20	Completed a project for Liu Corporation and received $5,675 cash.
December 22-26	Took the week off for the holidays.
December 28	Received $3,000 cash from Gomez Company on its receivable.
December 29	Reimbursed S. Rey for business automobile mileage (400 miles at $0.30 per mile).
December 31	The company paid $1,300 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 $600 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, 2020.

4. Prepare an income statement for the three months ended December 31, 2020.

5. Prepare a statement of retained earnings for the three months ended December 31, 2020.

6. Prepare a balance sheet as of December 31, 2020.

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, 2020.

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