Question

After the success of the company’s first two months, Santana Rey continues to operate Business Solutions. The November 30, 2018, unadjusted trial balance of Business Solutions (reflecting its transactions for October and November of 2018) follows.

No.	Account Title	Debit			Credit
101	Cash	$	38,864
106	Accounts receivable		13,418
126	Computer supplies		2,645
128	Prepaid insurance		2,100
131	Prepaid rent		3,120
163	Office equipment		8,300
164	Accumulated depreciation—Office equipment				$	0
167	Computer equipment		24,000
168	Accumulated depreciation—Computer equipment					0
201	Accounts payable					0
210	Wages payable					0
236	Unearned computer services revenue					0
307	Common stock					66,000
318	Retained earnings					0
319	Dividends		6,100
403	Computer services revenue					38,359
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		1,638
676	Mileage expense		634
677	Miscellaneous expenses		250
684	Repairs expense—Computer		765
	Totals	$	104,359		$	104,359

Business Solutions had the following transactions and events in December 2018.   

Dec.	2		Paid $940 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 $4,650 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 $7,600 on a proposed project has been accepted. Alex’s paid a $2,000 cash advance to Business Solutions.
	15		Purchased $1,300 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 $6,025 cash.
	22–26		Took the week off for the holidays.
	28		Received $3,300 cash from Gomez Co. on its receivable.
	29		Reimbursed S. Rey for business automobile mileage (500 miles at $0.22 per mile).
	31		The company paid $1,500 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:

1. The December 31 inventory count of computer supplies shows $600 still available.
2. Three months have expired since the 12-month insurance premium was paid in advance.
3. As of December 31, Lyn Addie has not been paid for four days of work at $120 per day.
4. The computer system, acquired on October 1, is expected to have a four-year life with no salvage value.
5. The office equipment, acquired on October 1, is expected to have a five-year life with no salvage value.
6. 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.
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, 2018.
4. Prepare an income statement for the three months ended December 31, 2018.
5. Prepare a statement of retained earnings for the three months ended December 31, 2018.
6. Prepare a balance sheet as of December 31, 2018.
7. Record and post the necessary closing entries as of December 31, 2018.
8. Prepare a post-closing trial balance as of December 31, 2018.

it is ok to do part 1 and part 2 to start with

After the success of the company's first two months, Santana Rey continues to oserate Business Solutions. The November 30, 2018. unadjusted trial balance of Business Solutions (reflecting its transactions for October and November of 2018) follows. Credit Debit Account Title No. Cash Accounts receivable Computer supplies Prepaid insurance Prepaid rent office equipment Accumulated depreciation-office equipment Computer equipment Accu ulated depreciation-Computer equipment Accounts payable Wages payable Unearned computer services revenue $ 38,864 13,418 2,645 2,1ee 3,12e 8,30e 181 106 126 128 131 163 164 24,e0e 167 168 281 210 236 307 66,00e 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 318 319 6,180 483 612 38, 359 613 2,525 623 637 640 652 655 676 1,638 634 677 250 765 684 Totals $104, 359 $104, 359 Business Solutions had the following transactions and events in December 2018. 2 Paid $948 cash to Hillside Mall for Business Solutions share of mall advertising costs. 3 Paid $448 cash for sinor repairs to the company's computer. 4 Received $4,65e cash from Alex's Engineering Co. for the receivable from November. 1e 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 $7,6ee on a proposed project has been accepted. Alex's paid a $2,00e cash advance to Business Solutions. 15 Purchased $1,30e of computer supplies on credit from Harris office Products. 16 Sent a reminder to Gonez Co. to pay the fee for services recorded on November 8. 20 Completed a project for Liu Corporation and received $6,825 cash. 22- Took the week off for the holidays. Dec. 26 28 Received $3,300 cash from Gonez Co. on its receivable. 29 Reimbursed s. Rey for business automobile mileage (58e miles at $e.22 per mile). 31 The company paid $1, se0 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: a. The December 31 inventory count of computer supplies shows $600 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 $120 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 t. 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. 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 3. Prepare an adjusted trial balance as of December 31, 2018. 4. Prepare an income statement for the three months ended December 31, 2018. 5. Prepare a statement of retained earnings for the three months ended December 31, 2018. 6. Prepare a balance sheet as of December 31, 2018. 7. Record and post the necessary closing entries as of December 31, 2018 8. Prepare a post-closing trial balance as of December 31, 2018. in the ledger

Answer 1

Business Solutions Journal entries Credit Debit Calculation Date Account 2-Dec Advertising expense $ 940 Cash 940 3-Dec Repairs expense-Computer 440 Cash 440 $4,650 4-Dec Cash $ 4,650 Accounts Receivable 10-Dec Wages expense 6*120 720 Cash 720 2,000 14-Dec Cash Unearned Computer Services Revenue 2,000 15-Dec Computer Supplies Accounts Payable 1,300 1,300 16-Dec No entry 20-Dec Cash 6,025 $6,025 Computer Services Revenue Dec 22-26 No entry 28-Dec Cash 3,300 Accounts Receivable 3,300 =500 0.22 29-Dec Mileage expense 110 Cash 110 31-Dec Dividends 1,500 Cash 1,500

Adjusting entries 31-Dec Computer supplies expense -2,645+1,300-600 3,315 $ Computer Supplies 3,315 -2,100/12*3 31-Dec Insurance expense 525 Prepaid Insurance 525 31-Dec Wages expense 480 4*120 $ Wages Payable 480 -24,000/4*3/12 31-Dec Depreciation expense-Computer Equipment 1,500 Accumulated Depreciation-Computer Equipment 1,500 -8,300/5*3/12 31-Dec Depreciation expense-Office Equipment 415 Accumulated Depreciation-Office Equipment 415 $2,340 31-Dec Rent expense 3,120/4*3 Prepaid Rent 2,340 Closing entries $ 44,384 31-Dec Computer Services Revenue $44,384 Income Summary $16,597 31-Dec Income Summary Depreciation expense-Office Equipment 415 Depreciation expense-Computer Equipment 1,500 Wages expense 3,725 Insurance expense 525 Rent expense 2,340 Computer supplies expense 3,315 Advertising expense 2,578 Mileage expense 744 Miscellaneous expense 250 Repairs expense-Computer 1,205 $ 27,787 31-Dec Income Summary -44,384-16,597 Retained Earnings 27,787 31-Dec Retained Earnings 7,600 Dividends 7,600

Business Solutions T Accounts Date Date Computer Supplies $ 2,645 Date Date Debit Credit Debit Credit Debit Credit Debit Credit Date Date Date Date Cash Accounts Receivable Prepaid Insurance $13,418 4-Dec 4,650 $ 2,100 31-Dec $ $38,864 2-Dec $ Op bal Op bal Op bal Op bal 940 525 4-Dec $ 4,650 3-Dec $ 15-Dec 1,300 28-Dec $ 3,300 31-Dec $ 3,315 440 14-Dec $ 2,000 10-Dec $ 720 29-Dec $ 20-Dec 6,025 110 28-Dec S 3,300 31-Dec $ 1,500 $ 5,468 $ 1,575 Bal. $51,129 Bal. Bal. Bal. 630 Office Equip Accum. Depr.- Computer Equip 31-Dec 1,500 Accum. Depr. - Office Equip 31-Dec $ Computer Equipment $24,000 $ 8,300 Op bal Op bal 415 Bal. $24,000 Bal $ 1,500 Bal. $ 8,300 415 Bal. Wages Payable 31-Dec $ Prepaid Rent $ 3,120 Accounts Payable Unearned Computer Services Revenue 14-Dec $ 2,000 15-Dec $ 1,300 Op bal 31-Dec $ 2.340 480 Bal. $ 2,000 S Bal. Bal. $ Bal. 780 1,300 480 Common Stock Dividends Income Smmary Retained Earnings Op bal 31-Dec 7,600 Op bal $ 66,000 $6,100 31-Dec $16,597 Op bal 31-Dec $44,384 31-Dec $ 1.500 31-Dec $ 7,600 31-Dec $27,787 31-Dec $27,787 Bal. $66,000 $ $20,187 Bal. Bal. Bal. Wages expense $ 2,525 Computer Services Revenue Depreciation expense-Office Equipment 31-Dec $ Depreciation expense-Computer Equip 31-Dec $ 1,500 Op bal $38,359 Op bal 415 20-Dec 6,025 10-Dec $ 720 31-Dec $44,384 31-Dec $ 1,500 31-Dec $ 31-Dec $ 31-Dec $ 3,725 415 480 Bal. $ Bal. Bal. Bal. Rent expense Computer supplies expense 31-Dec 3,315 Advertising expense $ 1,638 Insurance expense 31-Dec $ 525 31-Dec $ 2,340 Op bal 31-Dec $ 31-Dec $2,340 31-Dec $ 3,315 2-Dec $ 31-Dec 2,578 940 525 $ $ Bal. Bal. S Bal. Bal. - Mileage expense Miscellaneous expense Repairs expense-Computer Op bal 3-Dec $ Op bal Op bal 634 250 765 31-Dec $ 31-Dec $ 31-Dec $ 1,205 29-Dec $ 110 744 250 440 Bal. S Bal. S Bal.

Business Solutions Opening TB Adjusted TB Post Closing TB Debit Credit Debit Credit Debit Credit Account Names Cash 51,129 38,864 51,129 5,468 Accounts Receivable 13,418 5,468 Computer Supplies 2,645 630 630 Prepaid Insurance 2,100 1,575 1,575 Prepaid Rent 3,120 780 780 Office Equipment 8,300 8,300 8,300 Accumulated Depreciation-Office Equipment 415 415 Computer Equipment 24,000 24,000 24,000 Accumulated Depreciation-Computer Equipment unts Payable 1,500 1,500 1,300 A 1,300 Wages Payable 480 480 Unearned Computer Services Revenue 2,000 2,000 Common Stock 66,000 66,000 66,000 Retained Earnings 20,187 Dividends 6,100 7,600 Computer Services Revenue 38,359 44,384 Depreciation expense-Office Equipment 415 1,500 Depreciation expense-Computer Equipment Wages expense 2,525 3,725 Insurance expense 525 Rent expense 2,340 Computer supplies expense 3,315 Advertising expense 1,638 2,578 Mileage expense 634 744 Miscellaneous expense 250 250 1,205 Repairs expense-Computer 765 Totals 116,079 116,079 91,882 104,359 104,359 91,882

Business Solutions Income Statement For three months ended Dec 31, 2018 Computer Services Revenue 44,384 Expenses Depreciation expense-Office Equipment 415 1,500 Depreciation expense-Computer Equipment Wages expense 3,725 Insurance expense 525 Rent expense 2,340 Computer supplies expense 3,315 Advertising expense 2,578 Mileage expense 744 Miscellaneous expense 250 Repairs expense-Computer 1,205 Total Expenses 16,597 27,787 Net Income Statement of Retained Earnings For three months ended Dec 31, 2018 Retained Earnings, Oct 1, 2018 Net Income 27,787 Less Dividends (7,600) Retained Earnings, Dec 31, 2018 20,187

Business Solutions Balance Sheet As of Dec 31, 2018 Assets Current Assets Cash 51,129 Accounts Receivable 5,468 Computer Supplies 630 Prepaid Insurance 1,575 Prepaid Rent 780 Total Current Assets 59,582 Fixed Assets Office Equipment 8,300 Accumulated Depreciation-Office Equipment (415) Office Equipment, Net 7,885 Computer Equipment 24,000 Accumulated Depreciation-Computer Equipment (1,500) Computer Equipment, Net 22,500 Total Fixed Assets 30,385 Total Assets 89,967 Liabilities & Equity Current Liabilities Accounts Payable 1,300 Wages Payable 480 Unearned Computer Services Revenue 2,000 Total Current Liabilities 3,780 Equity Common Stock 66,000 Retained Earnings 20,187 Total Equity Total Liabilities & Equity 86,187 89,967