24th Edition

ISBN: 9781260158625

Author: Wild

Publisher: MCG

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Textbook Question

Chapter 3, Problem 3SP

Question:

SERIAL PROBLEM

Business Solutions

P1 P2 P3 P4 PS P6

SP 3 After the success of the company's first two months, Santana Rey continues to operate Business Solutions. (Transactions for the first two months are described in the Chapter 2 serial problem.) The November 30,2019, unadjusted trial balance of Business Solutions (reflecting its transactions for October and November of 20 19) follows.

Chapter 3, Problem 3SP, Question: SERIAL PROBLEM Business Solutions P1 P2 P3 P4 PS P6 SP 3 After the success of the

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

Dec. 2 Paid $1,025 cash to Hillside Mall for Business Solutions's share of mall advertising costs.

3 Paid $500 cash for minor repairs to the company's computer.

4 Received $3,950 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 $125 per day.

14 Notified by Alex's Engineering Co. that Business Solutions's bid of $7,000 on a proposed project has been accepted. Alex's paid a $1,500 cash advance to Business Solutions.

15 Purchased $1,100 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 $5,625 cash.

22-26 Took the week off for the holidays.

28 Received $3,000 cash from Gomez Co. on its receivable.

29 Reimbursed S. Rey for business automobile mileage (600 miles at $0.32 per mile).

31 S. Rey withdrew $1,500 cash from the company for personal use.

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

a. The December 31 inventory count of computer supplies shows $580 still available.

b. Three months have expired since the 12-month insurance premium was paid in advance.

c. As of December 31, Lyn Addie has not been paid for four days of work at $125 per day.

d. The computer system, acquired on October 1, is expected to have a four-year life with no salvage value.

e. The office equipment, acquired on October 1, is expected to have a five-year life with no salvage value.

f. 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.

Post those entries to the accounts in the ledger.

2. Prepare adjusting entries to reflect a through Post those entries to the accounts in the ledger.

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 owner's equity for the three months ended December 3 1, 2019.

6. Prepare a balance sheet as of December 31, 2019.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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Chapter 3, Problem 5BP

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Solution Summary: The author explains journal entries to record the transactions and events for Solution B, and the adjusting entries for the three months ended 31 st December 2019.

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