Question

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Accounting 2140 - Comprehensive Problem On October 1, 2019, Santana Rey launched a computer services company called Business Solutions, which provides consulting services, computer system installations, and custom program development Rey adopts the calendar year for reporting purposes and expects to prepare the company's first set of financial statements on December 31, 2019. After the success of the company's first two months, Santana Rey continues to cperate Business Solutions. The November 30, 2019, unadjusted trial balance of Business Solutions (reflecting its transactions for October and November of 2019) follows. Credit Ne 101 106 126 128 Debit $ 38,664 12,618 2,545 1,980 3,100 8,700 131 163 164 167 168 201 20,800 236 307 318 319 67,000 Account Title Cash Accounts receivable Computer supplies Prepaid insurance Prepaid rent Office equipment Accumulated depreciation Office equipment Computer equipment Accumulated depreciation Computer equipment Accounts payable Wages payable Uneamed computer services revenue Common stock Retained earnings Dividends Computer services revenue Depreciation expense Office equipment Depreciation expense-Computer equipment Wages expense Insurance expense Rent expense Computer supplies expense Advertising expense Mileage expense Miscellaneous expenses Repairs expense-Computer Totals 6,000 33.249 612 613 623 2.575 640 652 655 676 677 684 1,698 624 160 785 $100,249 $100,249 Business Solutions had the following transactions and events in December 2019. Dec. 2 10 neamed O ore 10 4.44 1000 15 16 Paid $975 cash to Hillside Mall for Business Solutions' share of mail advertising costs Paid $440 cash for minor repairs to the company's computer. Received $4,150 cash from Alex's Engineering Co. for the receivable from November. Paid cash to Lyn Addie for six days of work at the rate of $105 per day. Notified by Alex's Engineering Co. that Business Solutions bid of $7.700 on a proposed to project has been accepted. Alex's paid a $2.000 cash advance to Business Solutions. Purchased $1,800 of computer supplies on credit from Harris Office Products Sent a reminder to Gomez Co, to pay the fee for services recorded on November 8. Completed a project for Liu Corporation and received $6,175 cash. Took the week off for the holidays. Received $3,600 cash from Gomez Co. on its receivable. Reimbursed S. Rey for business automobile mileage (400 miles at $0.24 per mile. The company paid $1,500 cash in dividends. brud w Survete 22-26 28 12.000

Answer 1

Business Solutions Journal Enteries Date Particulars 2.12.2019 Advertising expense a/c Dr. To Cash (Being Advertising expense paid in Cash) Debit in $Credit in $ 975 975 3.12.2019 Repairs expense - computer a/c Dr. To Cash (Being Computer repairs incurred in cash) 440 4.12.2019 Cash a/c Dr. To Accounts Receivable (Being Cash received in Debtors) 4150 10.12.2019 Wage expense a/c Dr. To Cash (Being Wages paid in Lyn Addie) 630 14.12.2019 Cash a/c Dr. To Unearned Computer service revenue (Being Cash received in advance from clients) 2000 1800 15.12.2019 Computer Supplies a/c Dr. To Accounts Payable (Being Computer Supplies purchased on account) 1800 16.12.2019 No Entry Dr. 6175 20.12.2019 Cash a/c To Computer Services Revenue (Being Cash received for project completed) 6175 3600 28.12.2019 Cash a/c Dr. To Accounts Receivable (Being Cash received from Debtors) 3600 29.12.2019 Mileage expense a/c Dr. To Cash (Being Mileage expense paid in cash) 400 x 0.24 31.12.2019 Dividends a/c Dr. To Cash (Being Dividends paid in cash) 1500 1500

Adjustment enteries Date Particulars Debit in $Credit in $ 31.12.2019 Computer supplies expense a/c Dr. 3695 To Computer Supplies 3695 2545 + 1800-580 (Being Computer Supplies Expense charged to Computer Supplies) 495 495 31.12.2019 Insurance expense a/c Dr. To Prepaid Insurance 1980 * 3/12 (Being Insurance expense charged to Prepaid Insurance) 420 420 31.12.2019 Wage expense a/c Dr. To Wages Payable (Being Wages accrued) 105 x 4 31.12.2019 Depreciation - Computer a/c Dr. To Accumulated Depreciation - Computer 20800 * 3/(4*12) (Being Depreciation charged to Computer Equip.) 1300 1300 435 435 31.12.2019 Depreciation - office equip a/c Dr. To Accumulated Depreciation - Office Equip 8700 * 3/(5*12) (Being Depreciation charged to Office Equip.) Dr 2325 31.12.2019 Rent expense a/c To Prepaid Rent 3100 x 3/4 (Being Rent expense charged to Prepaid Rent)

Closing Enteries Date Particulars 31.12.2019 Income Summary a/c Dr. To Depreciation - office equip To Depreciation - Computer To Wage expense To Insurance expense To Rent expense To Computer supplies expense To Advertising expense To Mileage expense To Miscellaneous expense To Repairs expense - computer Debit in $Credit in $ 16653 435 1300 3625 495 2325 3695 2673 720 160 1225 Dr. 39424 31.12.2019 Computer Service Revenue a/c To Income Summary 39424 Dr. 22771 31.12.2019 Income Summary a/c To Retained earnings 22771 Dr. 7500 31.12.2019 Retained Earnings a/c To Divdends 7500

Unadjusted Trial Balance As at 31.12.2019 4868 No. Particulars 101 Cash 106 Accounts Receivable 126 Computer Supplies 128 Prepaid Insurance 131 Prepaid Rent 163 Office Equipment 164 Accumulated Depreciation - Off. Equip 167 Computer Equipment 168 Accumulated Depreciation - Computer 201 Accounts Payable 210 Wages Payable 236 Unearned Computer service Revenue 307 Common Stock 318 Retained Earnings 319 Dividends 403 Computer Service Revenue 612 Depreciation - office equip 613 Depreciation - Computer 623 Wage expense 637 Insurance expense 640 Rent expense 652 Computer supplies expense 655 Advertising expense 676 Mileage expense 677 Miscellaneous expense 684 Repairs expense - computer Totals Unadjusted Adjustment Adjusted Post Closing Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ 50948 50948 50948 4868 4868 4345 3695 650 650 1980 495 1485 1485 3100 2325 775 775 8700 8700 8700 435 435 435 20800 20800 20800 1300 1300 1300 1800 1800 1800 420 420 420 2000 2000 2000 67000 67000 67000 15271 7500 7500 39424 39424 435 435 1300 1300 3205 420 3625 495 495 2325 3695 3695 2673 2673 720 160 160 1225 1225 110224 110224 8670 8670 112379 11237988226 88226 0 2325 720

39424 Statement of Income For the period ending 31.12.2019 Computer Service Revenue Less: Depreciation - office equip Depreciation - Computer Wage expense Insurance expense Rent expense Computer supplies expense Advertising expense Mileage expense Miscellaneous expense Repairs expense - computer Net Income 435 1300 3625 495 2325 3695 2673 720 160 1225 16653 22771 Statement of Retained Earnings For the period ending 31.12.2019 Beginning Balance Net Income Dividends 31.12.2019 22771 -7500 15271

Amounts in $ Amounts in $ Balance sheet As at 31.12.2019 Assets Current Assets Cash Accounts Receivable Computer Supplies Prepaid Insurance Prepaid Rent Amounts in $ Amounts in $ Liabilities Current Liabilities 50948 Accounts Payable 4868 Wages Payable 650 Unearned Computer service Revenue 1485 775 58726 1800 420 2000 4220 Non Current Assets Office Equipment Accumulated Depreciatior Computer Equipment Accumulated Depreciation Total Assets 8700 -435 20800 -1300 8265 Shareholders Equity Common Stock 19500 Retained Earnings 86491 Total Liabilities & Shareholders Equity 67000 15271 82271 86491