Chapter 4, Problem 4SP

Santana Rey created Business Solutions on October 1, 2019. The company has been successful, and its list of customers has grown. To accommodate the growth, the accounting system is modified to set up separate accounts for each customer. The following chart of accounts includes the account number used for each account and any balance as of December 31, 2019. Santana Rey decided to add a fourth digit with a decimal point to the 106 account number that had been used for the single Accounts Receivable account. This change allows the company to continue using the existing chart of accounts.


(c)Alexander Image/Shutterstock
An response to requests from customers, S. Rey will begin selling computer software. The company will extend credit terms of $1/10,\text{n}/30,$ iOB shipping point, to all customers who purchase this merchandise. However, no cash discount is available on consulting fees. Additional accounts (Nos. 119, 413, 414, 415, and 502) are added to its general ledger to accommodate the company’s new merchandising activities. Its transactions for January through March follow.
Jan. 4 The company paid cash to Lyn Addie for five days’ work at the rate of $125 per day. Four of the five days relate to wages payable that were accrued in the prior year.
5. Santana Rey invested an additional $25,000 cash in the company in exchange for more common stock.
7 The company purchased $5,800 of merchandise from Kansas Corp. with terms of $1/10,\text{n}/30,$ FOB shipping point, invoice dated January 7.
9 The company received $2,668 cash from Gomez Co. as full payment on its account.
11 The company completed a five-day project for Alex’s Engineering Co. and billed it $5,500, which is the total price of $7,000 less the advance payment of $1,500. The company debited Unearned Computer Services Revenue for $1,500.
13 The company sold merchandise with a retail value of $5,200 and a cost of $3,560 to Liu Corp., invoice dated January 13.
15 The company paid $600 cash for freight charges on the merchandise purchased on January 7.
16 The company received $4,000 cash from Delta Co. for computer services provided.
17 The company paid Kansas Corp. for the invoice dated January 7, net of the discount.
20 The company gave a price reduction (allowance) of $500to Liu Corp. and credited Liu's accounts receivable for that amount.
22 The company received the balance due from Liu Corp., net of the discount and the allowance.
24 The company returned defective merchandise to Kansas Corp. and accepted a credit against future purchases (debited accounts payable). The defective merchandise invoice cost, net of the discount, was $496.
26 The company purchased $9,000 of merchandise from Kansas Corp. with terms of $1/10,\text{n}/30,$ FOB destination, invoice dated January 26.
26 The company sold merchandise with a $4,640 cost for $5,800 on credit to KC, Inc., invoice dated January 26.
31 The company paid cash to Lyn Addie for 10 days' work at $125 per day.
Feb. 1 The company paid $2,475 cash to Hillside Mall for another three months' rent in advance.
3 The company paid Kansas Corp. for the balance due, net of the cash discount, less the $496 credit from merchandise returned on January 24.
5 The company paid $600 cash to Facebook for an advertisement to appear on February 5 only.
11 The company received the balance due from Alex's Engineering Co. for fees billed on January 11.
15 The company paid a $4,800 cash dividend.
23 The company sold merchandise with a $2,660 cost for $3,220 on credit to Delta Co., invoice dated February 23.
26 The company paid cash to Lyn Addie for eight days' work at $125 per day.
27 The company reimbursed Santana Rey $192 cash for business automobile mileage. The company recorded the reimbursement as "Mileage Expense."
Mar. 8 The company purchased $2,730 of computer supplies from Harris Office Products on credit with terms of $\text{n}/30$ , FOB destination, invoice dated March8.
9 The company received the balance due from Delta Co. for merchandise sold on February 23.
11 The company paid $960 cash for minor repairs to the company's computer.
16 The company received $5,260 cash from Dream, Inc., for computing services provided.
19 The company paid the full amount due of $3,830 to Harris Office Products, consisting of amounts created on December 15 (of $1,100) and March 8.
24 The company billed Easy Leasing for $9,047 of computing services provided.
25 The company sold merchandise with a $2,002 cost for $2,800 on credit to Wildcat Services, invoice dated March 25.
30 The company sold merchandise with a $1,048 cost for $2,220 on credit to IFM Company, invoice dated March 30.
31 The company reimbursed Santana Rey $128 cash for business automobile mileage. The company recorded the reimbursement as "Mileage Expense."
The following additional facts are available for preparing adjustments on March 31 prior to financial statement preparation.
a. The March 31 amount of computer supplies still available totals $2,005.
b. Prepaid insurance coverage of $555 expired during this three-month period.
C. Lyn Addie has not been paid for seven days of work at the rate of $125 per day.
d. Prepaid rent of $2,475 expired during this three-month period.
e. Depreciation on the computer equipment for January 1 through March 31 is $1,250.
f. Depreciation on the office equipment for January 1 through March 31 is $400.
g. The March 31 amount of merchandise inventory still available totals $704.
Required
1. Prepare journal entries to record each of the January through March transactions.
2. Post the journal entries in part 1 to the accounts in the company's general ledger. Note: Begin with the ledger's post-closing adjusted balances as of December 31,2019.
Check (2) Ending balances at March 31: Cash, $68,057; Sales, $19,240
3. Prepare a 6-column work sheet (similar to the one shown in Exhibit 3.13) that includes the unadjusted trial balance, the March 31 adjustments (a) through (g), and the adjusted trial balance. Do not prepare closing entries and do not journalize the adjustments or post them to the ledger.
(3) Unadj. TB totals, $151,557; Adj. TB totals, $154,082
4. Prepare an income statement (from the adjusted trial balance in part 3) for the three months ended March 31, 2020. (a) Use a single-step format. List all expenses without differentiating between selling expenses and general and administrative expenses. (b) Use a multiple-step format that begins with gross sales (service revenues plus gross product sales) and includes separate categories for net sales, cost of goods sold, selling expenses, and general and administrative expenses. Categorize the following accounts as selling expenses: wages expense, mileage expense, and advertising expense. Categorize the remaining expenses as general and administrative.
(4) Net income, $18,833
5. Prepare a statement of retained earnings (from the adjusted trial balance in part 3) for the three months ended March 31, 2020.
(5) S. Rey, Capital (at March 31), $119,393
6. Prepare a classified balance sheet (from the adjusted trial balance) as of March 31, 2020.
(6) Total assets, $120,268

To determine

Journal Entries:

Journal entries are the basic entries recoded as per the transactions being entered into by the business in its day to day operations in a chronological order.

Accounting rules regarding journal entries:

• Balance increases when: assets, losses and expenses are debited and liabilities, gains and incomes get credited.
• Balance decreases when: assets, losses and expenses get credited and liabilities, gains and incomes are debited.

To prepare: Journal entry

Explanation of Solution

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Jan 1, 2018	Wages		725
	Cash			145
	Accrued wages			580
	(Being wages paid through cash and accrued wages account)

Table (1)

• Wages are expenses for the company which decrease the assets of the company hence debit wages account.
• Cash is an asset which is decreased after payment of wages.
• Accrued wages are provisions or gains are utilized in order to pay the wages.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Jan 1, 2018	Cash		25,000
	Common stock			25,000
	( Being amount invested in exchange of common stock )

Table (2)

• Cash is an asset which is increased on being invested in exchange for common stock.
• Common stock is sold out for cash hence asset is decreased hence credit common stock account.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Jan 7, 2018	Merchandise purchase		5,800
	Cash			5,800
	( Being merchandise purchased )

Table (3)

• Purchase of merchandise increases the assets hence debit merchandise purchase account.
• Cash is an asset which is decreased by purchasing merchandise hence credit cash account.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Jan 9, 2018	Cash		2,668
	Accounts Receivable			2,668
	( Being cash received on account of fulfillment of accounts receivable)

Table (4)

• Cash is an asset which is increased on account of receiving full payment of accounts receivable hence debit cash account.
• Accounts receivable is an asset which is decreased as and when the payment is made hence accounts receivable account is credited.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Jan 11, 2018	Cash		5,500
	Project fees			5,500
	( Being cash received on account of project being delivered )

Table (5)

• Cash is an asset which is increased on account of project being delivered to the client.
• Project fees is an income which is increases the asset hence credit all incomes and gains.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Jan 13, 2108	Cash		3,560
	Loss on sale		1,640
	Sales			5,200
	( Being sales recorded )

Table (6)

• Cash is an asset which is increased on account of sales being made.
• Loss on sale is an expense which decreases the asset hence debits all expenses and losses.
• Sales generate incomes hence credit all incomes and gains.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Jan 15, 2018	Freight		600
	Cash			600
	( Being freight paid in cash )

Table (7)

• Freight is an expense which decreases the asset of the company hence debits all expenses and losses.
• Cash is an asset which is decreased on account of freight being paid.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Jan 16,2018	Cash		4,000
	Computer Services delivered			4,000
	(Being cash received on account of computer services being provided.)

Table (8)

• Cash is an asset which is increased on account of computer services being delivered and fees received against it.
• Computer services provided is an income which increases the asset of the company hence credit all income and gains.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Jan 17,2018	Accounts receivable		500
	Purchase return			500
	(Being purchase return of merchandise being recorded)

Table (9)

• Cash is an asset which is increased on account of cash received after purchases being returned.
• Purchase return is credited as it decreases the inventory.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Jan. 20, 2018	Sales R& A		320
	Accounts Receivable			320
	(Being Solutions to leave cost of defective products in costs of goods sold)

Table (10)

• Sales R& A is an expense which decreases the asset hence debits all expenses and losses.
• Accounts Receivable is on being earned increases the asset hence, credit accounts receivable.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Jan. 22, 2018	Cash		500
	Accounts receivable			500
	(Being amount received from customers)

Table (11)

• Cash is an asset which is increased on account of amount received which increases the asset hence debit cash account.
• Accounts receivable is decreased as an asset hence credit accounts receivable.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Jan 24, 2018	Credit future purchases		496
	Merchandise			496
	(Being defective merchandise returned)

Table (12)

• Credit future purchases will increase the asset hence debit credit future purchases.
• The return of defective merchandise will decrease the asset hence credit defective merchandise.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Jan 26, 2018	Cash		5,800
	Profit on sales			1,160
	Sales			4,640
	(Being sales made and profit on sales earned)

Table (13)

• Cash is earned on account of sales being made which increases the assets.
• Profit on sale increases the asset hence credit all incomes and gains.
• Sales generate revenue which adds to the value of asset hence credit all incomes and gains.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Jan 31 2018	Wages		1,250
	Cash			1,250
	(Being wages paid)

Table (14)

• Wages are expense which decreases the assets hence debit all expenses and losses.
• Cash is paid to reimburse the wages which decreases the assets hence credit what goes out.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Feb 1, 2018	Advance Rent		2,475
	Cash			2,475
	(Being advance rent paid)

Table (15)

• Advance rent payment increases the asset hence debit advance rent account.
• Cash is paid to pay for advance rent hence cash as an asset is reduced hence credit what goes out.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Feb. 3, 2018	Accounts payable		5,800
	Cash			5,304
	Credit Memorandum			496
	( Being payment of accounts payable made and credit memorandum benefit availed)

Table (16)

• Accounts payable is a liability which is being paid off hence debit accounts payable.
• Cash is an asset which is decreased on account of payment of accounts payable hence credits all incomes and gains.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Feb.5, 2018	Advertisement expenses		600
	Cash			600
	( Being advertisement expenses paid)

Table (17)

• Advertisement expense is an expense which decreases the asset of the company hence debits all expenses and losses.
• Cash as an asset is reduced on account of such expenses being paid hence credit what goes out.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Feb.11,2018	Cash		5,000
	Bills Receivable			5,000
	(Being bills receivable received)

Table (18)

• Cash is increased on account of payment being received out bills receivable.
• Bills receivable as an asset is decreased on receiving the due payment over it hence credit bills receivable account.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Feb.15,2018	Dividends		4,800
	Cash			4,800
	(Being dividends paid)

Table (19)

• Dividends are expense for the company which reduces the assets of the company hence debit dividends account.
• Cash is an asset which is decreased on account of dividends being paid.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Feb 23, 2018	Cash		3,220
	Profit on sales			560
	Sales			2,660
	(Being sales made and profit on sales earned)

Table (20)

• Cash is earned on account of sales being made which increases the assets.
• Profit on sale increases the asset hence credit all incomes and gains.
• Sales generate revenue which adds to the value of asset hence credit all incomes and gains.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Feb.26,2018	Wages		1,000
	To cash			1,000
	(Being dividends paid)

Table (21)

• Wages are expense which decreases the assets hence debit all expenses and losses.
• Cash is paid to reimburse the wages which decreases the assets hence credit what goes out.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Feb.27,2018	Reimbursement expenses		192
	To cash			192
	(Being dividends paid)

Table (22)

• Reimbursement expense is an expense which decreases the asset of the company hence debits all expenses and losses.
• Cash as an asset is reduced on account of such expenses being paid hence credit what goes out.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
March8,2018	Computer supplies		2,370
	To cash			2,370
	(Being dividends paid)

Table (23)

• Computer supplies being purchased increases the asset of the company hence debit computer supplies account.
• Cash as an asset is decreased on purchase of computer supplies hence credit cash account.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
March9,2018	Cash		3,220
	Bills receivable			3,220
	(Being cash received on bills receivable)

Table (24)

• Cash is increased on account of payment being received out bills receivable.
• Bills receivable as an asset is decreased on receiving the due payment over it hence credit bills receivable account.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
March11,2018	Minor Repairs		960
	Cash			960
	(Being cash paid for minor repairs)

Table (25)

• Minor repairs expense is an expense which decreases the asset of the company hence debits all expenses and losses.
• Cash as an asset is reduced on account of such expenses being paid hence credit what goes out.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
March16,2018	Cash		5,260
	Services Revenue			5,260
	(Being cash received on account of computing services provided)

Table (25)

• Cash is increased as an asset on account of earning revenue hence debit cash account.
• Services revenue is an income hence credit all incomes and gains.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
March17,2018	Accounts Payable		1,100
	Cash			1,100
	(Being accounts payable cleared)

Table (26)

• Accounts payable is an expense which decreases the asset hence debit accounts payable.
• Cash is decreased as an asset on accounts of payment of accounts payable being made.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Mar 24,2018	Bills receivable		9,047
	Services revenue earned			9,047
	(Being bills receivable received on account of service revenue earned)

Table (27)

• Bills receivable creates a future income which increases the assets hence debit bills receivable account.
• Services revenue earned is incomes hence credit all incomes and gains.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Mar.25, 2018	Cash		2,800
	Profit on sales			798
	Sales			2,002
	(Being sales made and profit on sales earned)

Table (28)

• Cash is earned on account of sales being made which increases the assets.
• Profit on sale increases the asset hence credit all incomes and gains.
• Sales generate revenue which adds to the value of asset hence credit all incomes and gains.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
Mar.25, 2018	Cash		2,200
	Profit on sales			1,152
	Sales			1,048
	(Being sales made and profit on sales earned)

Table (29)

• Cash is earned on account of sales being made which increases the assets.
• Profit on sale increases the asset hence credit all incomes and gains.
• Sales generate revenue which adds to the value of asset hence credit all incomes and gains.

Date	Account Title and Explanation	Post ref	Debit($)	Credit($)
March31,2018	Reimbursement expenses		128
	Cash			128
	(Being bills receivable received on account of service revenue earned)

Table (30)

• Reimbursement expense is an expense which decreases the asset of the company hence debits all expenses and losses.
• Cash as an asset is reduced on account of such expenses being paid hence credit what goes out.

To determine

To prepare: General ledger of the journal entries in part (1).

Explanation of Solution

Cash          Acct. No. 101
Date	Account Title and Explanation	Post ref	Debit($)	Credit($)	Balance($)
Jan1	Common Stock		25,000		25,000
Jan1	Wages		145		24,855
Jan7	Purchase		5,800		19,055
Jan7	Accounts payable			5,800	24,855
Jan9	Accounts Receivable		2,668		22,187
Jan11	Service Revenue			5,500	27,687
Jan13	Loss on sale		1,640		26,047
Jan13	Sales			5,200	31,427
Jan15	Freight		600		30,647
Jan16	Service Revenue			4,000	34,647
Jan26	Sales			5,800	40,447
Jan31	Wages		5,800		34,647
Jan17	Accounts receivable		500		34,147
Feb.1	Advance rent paid		2,475		31,672
Feb.3	Cash memorandum		496		31,176
Feb.5	Advertisement expenses		600		30,576
Feb.11	Bills Receivable			5,000	35,576
Feb.15	Dividends		4,800		30,776
Feb.26	Wages		1,000		29,776
Feb.27,	Reimbursement expenses		192		29,584
March8	Computer Supplies		2,370		27,214
March11	Minor repairs		960		26,254
March16	Service revenue earned			5,260	31,514
March17	Accounts payable		1,100		30,414
March25	Sales			2,800	33,214
March30	Sales			2,200	35,414
March31	Reimbursement expenses		128		35,286

Table (31)

Purchases      Acct. No. 302
Date	Account Title and Explanation	Post ref	Debit($)	Credit($)	Balance($)
Jan7	Cash			5,800	5,800

Table (32)

Wages       Acct. No.
Date	Account Title and Explanation	Post ref	Debit($)	Credit($)	Balance($)
Jan1	Cash		145
Jan31	Cash		1,250
Feb.26	Cash		1,000		2,395

Table (33)

Common Stock       Acct. No. 302
Date	Account Title and Explanation	Post ref	Debit($)	Credit($)	Balance($)
Jan7	Cash			25,000	25,000

Table (34)

Accounts Receivable       Acct. No.
Date	Account Title and Explanation	Post ref	Debit($)	Credit($)	Balance($)
Jan9	Cash		2,668
Feb 11	Cash		5,000
March9	Cash		3,220		10,888

Table (35)

Service Revenue Earned       Acct. No.
Date	Account Title and Explanation	Post ref	Debit($)	Credit($)	Balance($)
Jan11	Cash			5,500
Jan16	Cash			4,000
March16	Cash			5,260	10,888

Table (36)

Sales      Acct. No.
Date	Account Title and Explanation	Post ref	Debit($)	Credit($)	Balance($)
Jan13,2018	Cash			5,200
Jan7,2018	Cash			5,800
Feb 23,2018	Cash			3,220
March25,2018	Cash			2,800
March30,2018	Cash			2,200	19,220

Table (37)

Cash Memorandum
Date	Account Title	Debit(Dr.) ($)	Date	Account Title	Credit(Cr.) ($)
Feb 3,2018	Balance b/d	496	Feb 3,2018	Cash	496
		496			496

Table (38)

Loss on Sale     Acct. No.
Date	Account Title and Explanation	Post ref	Debit($)	Credit($)	Balance($)
Jan13	Cash		1,640

Table (39)

Freight      Acct. No.
Date	Account Title and Explanation	Post ref	Debit($)	Credit($)	Balance($)
Jan15	Cash		600		600

Table (40)

Advance Rent      Acct. No.
Date	Account Title and Explanation	Post ref	Debit($)	Credit($)	Balance($)
Feb 1	Cash		2,475		2,475

Table (41)

Accounts Payable      Acct. No.
Date	Account Title and Explanation	Post ref	Debit($)	Credit($)	Balance($)
Jan7	Cash		5,800
March17	Cash		1,100		6,900

Table (42)

Advertisement Expenses      Acct. No.
Date	Account Title and Explanation	Post ref	Debit($)	Credit($)	Balance($)
Feb 5	Cash		600		600

Table (43)

Dividends      Acct. No.
Date	Account Title and Explanation	Post ref	Debit($)	Credit($)	Balance($)
Feb 15	Cash		4,800		4,800

Table (44)

Reimbursement Expenses      Acct. No.
Date	Account Title and Explanation	Post ref	Debit($)	Credit($)	Balance($)
Feb 27	Cash		128		128

Table (45)

Computer supplies      Acct. No.
Date	Account Title and Explanation	Post ref	Debit($)	Credit($)	Balance($)
March8	Cash		2,370		2,370

Table (46)

Minor Repairs      Acct. No.
Date	Account Title and Explanation	Post ref	Debit($)	Credit($)	Balance($)
March11	Cash		960		960

Table (47)

To determine

To prepare: A partial worksheet of 6 columns

Explanation of Solution

Accounts	Unadjusted Trial balance		Adjustments		Adjusted Trial balance		Income Statement		Balance Sheet and statement of enquiry
	Dr.	Cr.	Dr.	Cr.	Dr.	Cr.	Dr.	Cr.	Dr.	Cr.
Cash	8,200				8,200				8,200
Accounts Receivable	11,250				11,250				11,250
Allowance for sales discounts				50		50				50
Inventory	21,250			250	21,000				21,000
Inventory Returns estimated	200		300		500				500
Supplies	3,800			3,000	800				800
Prepaid insurance	900			600	300				300
Equipment	34,200				34,200				34,200
Accumulated depr.-Equipment		3,700		3,700		7,400				7,400
Accounts payable		16,000				16,000				16,000
Salaries payable				800		800				800
Sales refund payable		300		900		1,200				1,200
Capital Investments		41,900				41,900				41,900
Withdrawals	4,000				4,000				4,000
Sales		321,000				321,000		321,000
Sales returns and allowances	1,100		900		2,000		2,000
Sales discounts	4,250		50		4,300		4,300
Cost of goods sold	230,450		250	300	230,400		230,400
Depreciation expense-Equipment			3,700		3,700		3,700
Salaries expense	43,000		800		43,800		43,800
Insurance expense			600		600		600
Rent expense	9,000				9,000		9,000
Supplies expense			3,000		3,000		3,000
Advertising expense	11,300				11,300		11,300
Totals	382,900	382,900	9,600	9,600	388,350	388,350	308,100		80,250	67,350
Net income							12,900			12,900
Totals							321,000	321,000	80,250	80,250

Table (48)

To determine

To prepare: Income statement.

Explanation of Solution

Company
Income Statement
For the Month of March 31, 2018
	Amount ($)	Amount ($)
Services Revenue		25,307
Net sales		18,693
Total Revenue		44,000
:Cost of goods sold	14,052
Depreciation expense office equipment	400
Depreciation expense computer equipment	1,250
Wages	3,250
Insurance expense	555
Rent expense	2,475
Computer Supplies expense	1,305
Advertising expense	600
Reimbursement expense	320
Repairs expense	960
Total expenses		25,167
Net Income		18,833

Table (49)

To determine

To prepare: Statement of retained earnings.

Explanation of Solution

  $\begin{array}{c}\text{Retained Earnings}=\text{Opening}\text{Balance}+\text{Net}\text{Income}-\text{Dividend}\\ =\$7,860+\$18,333-\$4,800\\ =\$21,393\end{array}$

To determine

To prepare: Classified balance sheet from unadjusted balance sheet.

Explanation of Solution

Assets	Amount($)	Amount($)
Cash	68,057
Accounts Receivable	22,867
Inventory	704
Computer Supplies	2,005
Prepaid Insurance	1,110
Prepaid Rent	825
Office Equipment:	8000
Less: Accumulated Depreciation	(800)
Computer Equipment	20,000
: Less: Accumulated Depreciation	(2500)
Total Assets		120,268
Liabilities and Owners' Equity
Accounts Payable	0
Wages Payable	875
Unearned computer service revenue	0
Common Stock	98,000
Retained Earnings	21,393
Total Liabilities and Owners' Equity		120,268

Table (50)