Chapter 3, Problem 3SP

To determine

Prepare journal entries to record each of the given December transaction:

Introduction:

A journal entry is the recording of a transaction in journal items. The journal entry comprise of several recordings, each of which is either a debit or a credit. The total of the debits must equal the total of the credits.
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 Accounts Receivable A/c	$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.

To determine

Prepare adjusting entries to reflect a to f. And post those entries in ledger.

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
Depreciation expenses-Office Equipment A/c Dr 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.

To determine

Prepare Adjusted Trial Balance as of December 31, 2019

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
Accumulated Depreciation- Office Equipment		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.

To determine

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.

To determine

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.

To determine

Prepare balance sheet ended as of December 31, 2019

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.