
Concept explainers
Prepare journal entries to record each of the given December transaction:
Introduction:
A
To calculate:
Journal Entries:

Explanation of Solution
DATE | PARTICULARS | DR AMOUNT | CR AMOUNT |
Dec 2 | Advertising expense A/c Dr To Cash A/c | $1,025 | $1,025 |
Dec 3 | Repair Expense- Computer A/c Dr To Cash A/c | $500 | $500 |
Dec 4 | Cash A/c Dr To | $3950 | $3950 |
Dec 10 | Wages A/c Dr To Cash A/c | $750 | $750 |
Dec 14 | Cash A/c Dr To Unearned Computer Service Revenue | $1500 | $1500 |
Dec 15 | Computer Supplies A/c Dr To Accounts Payable A/c | $1100 | $1100 |
Dec 20 | Cash A/c Dr To Computer Services Revenue A/c | $5625 | $5625 |
Dec 28 | Cash A/c Dr To Accounts Receivable A/c | $3000 | $3000 |
Dec 29 | Mileage Expense A/c Dr To cash A/c | $192 | $192 |
Dec 31 | S. Rey Withdrawal A/c Dr To cash A/c | $1500 | $1500 |
Conclusion:
The above mentioned entries would be reflected in the books of Business Solution for the month of December.
Prepare
Introduction:
Adjusting entries are journal entries made at the end of an accounting period to allocate income or expenditure to the period in which they actually occurred.
To calculate:
Adjusting Entries for month end December.

Explanation of Solution
Particulars | Debit Amount | Credit Amount |
Computer Supplies Expenses A/c Dr To Computer Supplies A/c | $3065 | $3065 |
Insurance Expense A/c Dr To Prepaid Insurance | $555 | $555 |
Wages Expenses A/c Dr To Wages Payable | $500 | $500 |
To Office Equipment A/c | $400 | $400 |
Depreciation expenses- Computer Equipment A/c Dr To Computer Equipment A/c | $1250 | $1250 |
Rent Expense A/c Dr To Prepaid Rent A/c | $2475 | $2475 |
Conclusion:
The above mentioned adjusting entries would be reflected in the books of Business Solution for the month of December.
Prepare Adjusted
Introduction:
An adjusted trial balance is a list of all the account balances contained in the general ledger after the adjusting entries for a period have been posted in the accounts
To calculate:
Adjust Trial Balance as on December 31, 2019

Explanation of Solution
Account Title | Debit | Credit |
Cash | 48372 | |
Accounts Receivable | 5668 | |
Computer supplies | 580 | |
Prepaid Insurance | 1665 | |
Prepaid Rent | 825 | |
Office equipment | 8000 | |
400 | ||
Computer Equipment | 20000 | |
Accumulated Depreciation-Computer Equipment | 1250 | |
Accounts Payable | 1100 | |
Wages Payable | 500 | |
Unearned Computer Services Revenue | 1500 | |
S.Rey Capital | 73000 | |
S.Rey Withdrawl | 7100 | |
Computer Services Revenue | 31284 | |
Depreciation expenses-Office Equipment | 400 | |
Depreciation expenses- Computer Equipment | 1250 | |
Wages Expenses | 3875 | |
Insurance Expenses | 555 | |
Rent Expenses | 2475 | |
Computer Supplies Expenses | 3065 | |
Advertising Expenses | 2753 | |
Mileage Expenses | 896 | |
Miscellaneous Expense | 250 | |
Repair Expenses- Computer | 1305 | |
TOTALS | 109034 | 109034 |
Conclusion:
The aforesaid adjusted trial balance would be reflected in the books of Business Solution for the month of December.
Prepare Income Statement for three months ended as of December 31, 2019
Introduction:
An Income statement is the summary of all the income and expenses of a company over a period
To calculate:
Income Statement as on December 31, 2019

Explanation of Solution
Revenue | 31284 |
Unearned Computer Services Revenue | 1500 |
Expenses: | |
Depreciation expenses-Office Equipment | 400 |
Depreciation expenses- Computer Equipment | 1250 |
Wages Expenses | 3875 |
Insurance Expenses | 555 |
Rent Expenses | 2475 |
Computer Supplies Expenses | 3065 |
Advertising Expenses | 2753 |
Mileage Expenses | 896 |
Miscellaneous Expense | 250 |
Repair Expenses- Computer | 1305 |
Operating Income | 15960 |
The Income statement would show the above given income and expenses.
Conclusion:
The aforesaid income and expenditure would be reflected in the books of Business Solution for the month of December.
Prepare statement of owners equity for three months ended as of December 31, 2019
Introduction:
A statement of owners equity summarizes changes in the capital balance of a business over a defined period
To calculate:
Owners Equity as on December 31, 2019

Explanation of Solution
Opening Capital | 73,000 |
(+) Income earned | 15,960 |
(-) Losses incurred | |
(+) Owners Contribution during the period | |
(-) Owners draw during the period | (7,100) |
Closing Capital | 81,860 |
The owners equity would be shown as above with a closing balance of $ 81,860
Conclusion:
The aforesaid Owners Equity would be reflected in the books of Business Solution for the month of December.
Prepare
Introduction:
Balance sheet is a statement of assets and liabilities and capital of a business at a particular point of time
To calculate:
Balance Sheet as on December 31, 2019

Explanation of Solution
The balance sheet would be shown as above with a closing balance
Conclusion:
The aforesaid Balance sheet would be reflected in the books of Business Solution for the month of December.
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Chapter 3 Solutions
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