Question

After the success of the company’s first two months, Santana Rey continues to operate Business Solutions. The November 30, 2017, unadjusted trial balance of Business Solutions (reflecting its transactions for October and November of 2017) follows. No. Account Title Debit Credit 101 Cash $ 38,764 106 Accounts receivable 13,518 126 Computer supplies 2,545 128 Prepaid insurance 2,100 131 Prepaid rent 3,160 163 Office equipment 8,200 164 Accumulated depreciation—Office equipment $ 0 167 Computer equipment 23,600 168 Accumulated depreciation—Computer equipment 0 201 Accounts payable 0 210 Wages payable 0 236 Unearned computer services revenue 0 307 Common stock 72,000 318 Retained earnings 0 319 Dividends 6,500 403 Computer services revenue 32,189 612 Depreciation expense—Office equipment 0 613 Depreciation expense—Computer equipment 0 623 Wages expense 2,525 637 Insurance expense 0 640 Rent expense 0 652 Computer supplies expense 0 655 Advertising expense 1,668 676 Mileage expense 684 677 Miscellaneous expenses 190 684 Repairs expense—Computer 735 Totals $ 104,189 $ 104,189 Business Solutions had the following transactions and events in December 2017. Dec. 2 Paid $985 cash to Hillside Mall for Business Solutions’ share of mall advertising costs. 3 Paid $440 cash for minor repairs to the company’s computer. 4 Received $4,750 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 $120 per day. 14 Notified by Alex’s Engineering Co. that Business Solutions’ bid of $7,400 on a proposed project has been accepted. Alex’s paid a $2,000 cash advance to Business Solutions. 15 Purchased $1,500 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 $5,675 cash. 22–26 Took the week off for the holidays. 28 Received $3,600 cash from Gomez Co. on its receivable. 29 Reimbursed S. Rey for business automobile mileage (400 miles at $0.31 per mile). 31 The company paid $1,200 cash in dividends. The following additional facts are collected for use in making adjusting entries prior to preparing financial statements for the company’s first three months: The December 31 inventory count of computer supplies shows $610 still available. Three months have expired since the 12-month insurance premium was paid in advance. As of December 31, Lyn Addie has not been paid for four days of work at $120 per day. The computer system, acquired on October 1, is expected to have a four-year life with no salvage value. The office equipment, acquired on October 1, is expected to have a five-year life with no salvage value. Three of the four months' prepaid rent has expired. Required: 1. Prepare journal entries to record each of the December transactions and events for Business Solutions. 2-a. Prepare adjusting entries to reflect a through f. 2-b. Post the journal entries to record each of the December transactions, adjusting entries to the accounts in the ledger. 3. Prepare an adjusted trial balance as of December 31, 2017. 4. Prepare an income statement for the three months ended December 31, 2017. 5. Prepare a statement of retained earnings for the three months ended December 31, 2017. 6. Prepare a balance sheet as of December 31, 2017. 7. Record and post the necessary closing entries as of December 31, 2017. 8. Prepare a post-closing trial balance as of December 31, 2017.

Just need part 2b and on.

Answer 1

Business Solutions Req 1 Journal entries Date Account 2-Dec Advertising expense Credit Calculation Debit 985 Cash 985 440 3-Dec Repairs expense-Computer Cash 440 4,750 4-Dec Cash Accounts Receivable 4,750 720 =6*120 10-Dec Wages expense Cash 720 2,000 14-Dec Cash Unearned Computer Services Revenue 2,000 1,500 15-Dec Computer Supplies Accounts Payable 1,500 16-Dec No entry 5,675 20-Dec Cash Computer Services Revenue 5,675 Dec 22-26 No entry 3,600 28-Dec Cash Accounts Receivable 3,600 124 -400*0.31 29-Dec Mileage expense Cash 124 1,200 31-Dec Dividends Cash 1,200

Req 2-a Adjusting entries 31-Dec Computer supplies expense Computer Supplies 3,435 =2,545+1,500-610 3,435 525 =2,100/12*3 31-Dec Insurance expense Prepaid Insurance 525 480 -4*120 31-Dec Wages expense Wages Payable 480 1,475 =23,600/4*3/12 31-Dec Depreciation expense-Computer Equipment Accumulated Depreciation-Computer Equipment 1,475 410 =8,200/5*3/12 31-Dec Depreciation expense-Office Equipment Accumulated Depreciation Office Equipment 410 2,370 =3,160/4*3 31-Dec Rent expense Prepaid Rent 2,370

Business Solutions Req 2-b T Accounts Date Debit Credit Balance Date Debit Credit Balance Date Debit Credit Balance Date Debit Credit Balance Cash Accounts Receivable Computer Supplies Prepaid Insurance Op bal $ 38,764 $38,764 Op bal $13,518 $ 13,518 Op bal $ 2,545 $ 2,545 Op bal $ 2,100 $ 2,100 2-Dec $ 985 $ 37,779 4-Dec $ 4,750 $ 8,768 15-Dec $ 1,500 $ 4,045 31-Dec $ 525 $ 1,575 3-Dec $ 440 $37,339 28-Dec $ 3,600 $ 5,168 31-Dec $ 3,435 $ 610 4-Dec $ 4,750 $ 42,089 10-Dec $ 720 $ 41,369 14-Dec $ 2,000 $ 43,369 20-Dec $ 5,675 $ 49,044 28-Dec $ 3,600 $ 52,644 29-Dec $ 124 $ 52,520 31-Dec $ 1,200 $ 51,320 Office Equip Accum. Depr. - Office Equip Computer Equipment Accum. Depr. - Computer Equip Op bal $ 8,200 $ 8,200 31-Dec $ 410 $ 410 Op bal $ 23,600 $ 23,600 31-Dec $ 1,475 $ 1,475 Prepaid Rent Accounts Payable Wages Payable Unearned Computer Services Revenue Op bal $ 3,160 $ 3,160 15-Dec $ 1,500 $ 1,500 31-Dec $ 480 $ 480 14-Dec $ 2,000 $2,000 31-Dec $ 2,370 $ 790 Date Debit Credit Balance Date Debit Credit Balance Date Debit Credit Balance Date Debit Credit Balance Common Stock Dividends Income Summary Retained Earnings Op bal $ 72,000 $ 72,000 Op bal $6,500 $ 6,500 31-Dec $ 37,864 $ 37,864 Op bal $ - $ - 31-Dec $ 1,200 $ 7,700 31-Dec $ 16,766 $ 21,098 31-Dec $ 21,098 $ 21,098 31-Dec $ 7,700 $ - IL 31-Dec $ 21,098 $ - 31-Dec $ 7,700 $ 13,398 Computer Services Revenue Depreciation expense-Office Equipment Depreciation expense-Computer Equip Wages expense Op bal $ 32,189 $ 32,189 31-Dec $ 410 $ 410 31-Dec $ 1,475 $ 1,475 Op bal $ 2,525 $ 2,525 20-Dec $ 5,675 $ 37,864 31-Dec $ 410 $ - 31-Dec $ 1,475 $ - 10-Dec $ 720 $ 3,245 31-Dec $ 37,864 $ - 31-Dec $ 480 $ 3,725 31-Dec $ 3,725 $ . Insurance expense Rent expense Computer supplies expense Advertising expense 31-Dec $ 525 $ 525 31-Dec $ 2,370 $ 2,370 31-Dec $ 3,435 $ 3,435 Op bal $ 1,668 $ 1,668 31-Dec $ 525 $ - 31-Dec $ 2,370 $ - 31-Dec $ 3,435 $ - 2-Dec $ 985 $ 2,653 31-Dec $ 2,653 $ . Mileage expense Miscellaneous expense Repairs expense-Computer Op bal $ 684 $ 684 Op bal $ 190 $ 190 Op bal $ 735 $ 735 29-Dec $ 124 $ 808 31-Dec $ 190 $ - 3-Dec $ 440 $ 1,175 31-Dec $ 808 $ . 31-Dec $ 1,175 $ -

Business Solutions Account Names 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 Unearned 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 expense Repairs expense-Computer Totals Req3 Adjusted TB Debit Credit 51,320 5,168 610 1,575 790 8,200 410 23,600 1,475 1,500 480 2,000 72,000 7,700 37,864 410 1,475 3,725 525 2,370 3,435 2,653 808 190 1,175 115,729 115,729

37,864 Req 4 Business Solutions Income Statement For three months ended Dec 31, 2017 Computer Services Revenue Expenses Depreciation expense-Office Equipment Depreciation expense-Computer Equipment Wages expense Insurance expense Rent expense Computer supplies expense Advertising expense Mileage expense Miscellaneous expense Repairs expense-Computer Total Expenses Net Income 410 1,475 3,725 525 2,370 3,435 2,653 808 190 1,175 16,766 21,098 Req 5 Statement of Retained Earnings For three months ended Dec 31, 2017 Retained Earnings, Oct 1, 2017 Net Income Subtotal Less Dividends Retained Earnings, Dec 31, 2017 21,098 21,098 (7,700) 13,398

Req6 Business Solutions Balance Sheet As of Dec 31, 2017 Assets Current Assets Cash Accounts Receivable Computer Supplies Prepaid Insurance Prepaid Rent Total Current Assets 51,320 5,168 610 1,575 790 59,463 Fixed Assets Office Equipment Accumulated Depreciation Office Equipment Computer Equipment Accumulated Depreciation-Computer Equipment Total Fixed Assets Total Assets 8,200 (410) 7,790 23,600 (1,475) 22,125 29,915 89,378 Liabilities & Equity Liabilities Accounts Payable Wages Payable Unearned Computer Services Revenue Total Liabilities 1,500 480 2,000 3,980 Equity Common Stock Retained Earnings Total Equity Total Liabilities & Equity 72,000 13,398 85,398 89,378

Debit Credit Calculation Date Account Reg 2 Closing entries 31-Dec Computer Services Revenue Income Summary 37,864 37,864 16,766 31-Dec Income Summary Depreciation expense-Office Equipment Depreciation expense-Computer Equipment Wages expense Insurance expense Rent expense Computer supplies expense Advertising expense Mileage expense Miscellaneous expense Repairs expense-Computer 410 1,475 3,725 525 2,370 3,435 2,653 808 190 1,175 21,098 =37,864-16,766 31-Dec Income Summary Retained Earnings 21,098 7,700 31-Dec Retained Earnings Dividends 7,700

Business Solutions Account Names 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 Unearned 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 expense Repairs expense-Computer Totals Req8 Post Closing TB Debit Credit 51,320 5,168 610 1,575 790 8,200 410 23,600 1,475 1,500 480 2,000 72,000 13,398 91,263 91,263