Question

CUMULATIVE COMPREHENSION PROBLEM: ECHO SYSTE (This comprehensive problem starts in this chapter and continues in Chapters 3, 4, and 5. Because On October 1, 2020, Mary Graham organized a computer service company called Echo Systems. E program development. Graham has adopted the calendar year for reporting, and expects to prepare ized as a sole proprietorship and will provide consulting services, computer system installations pany's first set of financial statements as of December 31, 2020. The initial chart of accounts for Insurance 5. What will you do about your concerns this problem is most easily solved if you use the Working Papers that accompany this tea) Р P с ing system includes these items: . Account Number Account Name Account Number Account Name 101 106 126 128 131 163 167 201 Cash Accounts Receivable Computer Supplies Prepaid Insurance Prepaid Rent Office Equipment Computer Equipment Accounts Payable 301 302 403 623 655 676 684 Mary Graham, Capital Mary Graham Withdrawal Computer Services Revenue Wages Expense Advertising Expense Mileage Expense Repairs Expense. Computer Charitable Donations Expense 699 Part A: CHECK FIGURES: 4. Total Dr. = $159,450; Profit = $8.920: Total assets $145720 Required 1. Set up balance column accounts based on the chart of accounts provided. 2. Prepare journal entries to record each of the following October transactions. 3. Post the October entries. 4. Prepare a trial balance at October 31, 2020. 5. Prepare an income statement and a statement of changes in equity for the month ended October 31, as well as a balance sheet at October 31, 2020, 14 If students have not purchased the Working Paper package, the Working Papers for the Serial Problem are available on Connect 152

Answer 1

1 & 3 :

Cash
Oct 1	90,000	Oct 2	9,000
Oct 15	6,600	Oct 5	4,320
Oct 22	2,400	Oct 8	2,640
		Oct 17	1,410
		Oct 20	3,720
		Oct 31	1,400
		Oct 31	7,200
End. bal.	69,310
Accounts Receivable
Oct 6	6,600	Oct 15	6,600
Oct 12	2,400	Oct 22	2,400
Oct 28	6,450
End. bal.	6,450
Computer Supplies
Oct 3	2,640
Prepaid Insurance
Oct 5	4,320
Prepaid Rent
Oct 2	9,000
Office Equipment
Oct 1	18,000
Computer Equipment
Oct 1	36,000
Accounts Payable
Oct 8	2,640	Oct 3	2,640
Mary Graham, Capital
		Oct 1	144,000
Mary Graham, Withdrawals
Oct 31	7,200
Computer Services Revenue
		Oct 6	6,600
		Oct 12	2,400
		Oct 28	6,450
			15,450
Wages Expense
Oct 31	1,400
Advertising Expense
Oct 20	3,720
Repairs Expense: Computer
Oct 17	1,410

2.

Date	General Journal	Debit	Credit
Oct		$	$
1	Cash	90,000
	Office Equipment	18,000
	Computer Equipment	36,000
	Mary Graham, Capital		144,000
2	Prepaid Rent	9,000
	Cash		9,000
3	Computer Supplies	2,640
	Accounts Payable		2,640
5	Prepaid Insurance	4,320
	Cash		4,320
6	Accounts Receivable	6,600
	Computer Services Revenue		6,600
8	Accounts Payable	2,640
	Cash		2,640
10	No journal entry required	0	0
12	Accounts Receivable	2,400
	Computer Services Revenue		2,400
15	Cash	6,600
	Accounts Receivable		6,600
17	Repairs Expense: Computer	1,410
	Cash		1,410
20	Advertising Expense	3,720
	Cash		3,720
22	Cash	2,400
	Accounts Receivable		2,400
28	Accounts Receivable	6,450
	Computer Services Revenue		6,450
31	Wages Expense	1,400
	Cash		1,400
31	Mary Graham, Withdrawals	7,200
	Cash		7,200

4.

Echo Systems Trial Balance October 31, 2020
Account Titles	Debit	Credit
	$	$
Cash	69,310
Accounts Receivable	6,450
Computer Supplies	2,640
Prepaid Insurance	4,320
Prepaid Rent	9,000
Office Equipment	18,000
Computer Equipment	36,000
AccountsPayable		0
Mary Graham, Capital		144,000
Mary Graham, Withdrawals	7,200
Computer Services Revenue		15,450
Wages Expense	1,400
Advertising Expense	3,720
Mileage Expense	0
Repairs Expense: Computer	1,410
Charitable Donations Expense
Totals	$ 159,450	$ 159,450

5.

Echo Systems Income Statement For the month ended October 31, 2020
Computer Services Revenue		$ 15,450
Expenses
Advertising Expense	$ 3,720
Wages Expense	1,400
Repairs Expense: Computer	1,410
Total Expenses		6,530
Profit		$ 8,920

Echo Systems Balance Sheet October 31
Assets		Liabilities and Owner's Equity
Cash	69,310	Liabilities	NIL
Accounts Receivable	6,450
Computer Supplies	2,640	Mary Graham, Capital	145,720
Prepaid Insurance	4,320
Prepaid Rent	9,000
Office Equipment	18,000
Computer Equipment	36,000
Total Assets	$ 145,720	Total Liabilities and Owner's Equity	$ 145,720