Question

After the success of the company's first two months, Santana Rey continues to operate Business Solutions. The November 30, 2019, unadjusted trial balance of Business Solutions (reflecting its transactions for October and November of 2019) follows. Credit No. 101 106 126 Debit $ 38,264 12,613 128 2,20 3,300 8.000 20,000 73,000 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 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 expenses Repairs expense-Computer Totals 131 16 164 167 168 201 210 236 307 318 319 403 612 613 623 637 640 652 655 676 677 684 5,600 25,659 2,625 . 1,728 784 250 $ 98,659 $98,659 Business Solutions had the following transactions and events in December 2019. Dec. 2 Paid $1,025 cash to Hillside Hall for Business Solutions' share of all advertising costs. 3 Paid $500 cash for minor repairs to the company's computer. 4 Received $3,950 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 $125 per day. 14 Notified by Alex's Engineering Co. that Business Solutions bid of $7,000 on a proposed project has been accepted. Alex's paid a $1,500 cash advance to Business Solutions. 15 Purchased $1,100 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 3. 2e Completed a project for Liu Corporation and received $5,625 cash. 22-26 Took the week off for the holidays. 28 Received $3,000 cash from Gomez Co. on its receivable. 29 Reimbursed S. Rey for business automobile mileage (600 miles at $0.32 per aile). 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. a. The December 31 inventory count of computer supplies shows $580 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 $125 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.

Answer 1

Required: 1. Prepare journal entries to record each of the December transactions and events for Business Solutions. (In cases where no entry is required, please select the option "No journal entry required" for your answer to grade correctly. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.) Date General Journal Credit Debit 1025 Dec. 2 Advertising expense Check Your Work Cash 1025 3 Repairs expense-computer 500 Cash 500 . 4 Cash 3950 Accounts receivable 3950 . 10 Wages expense 750 Cash 750 14 Cash 1500 Unearned computer services revenue 1500 15 1100 Computer supplies Accounts payable 1100 16 0 No journal entry required No journal entry required 0 20 Cash > 5625 Computer services revenue 5625 28 Cash 3000 Accounts receivable 3000 29 Mileage expense 192 Cash 192 31 Dividends 1500 Cash 1500

2.1 Prepare adjusting entries to reflect a through f. (Omit the "$" sign in your response.) Date General Journal Credit Debit 3065 Dec. 31 Computer supplies expense 3065 Computer supplies 555 Insurance expense < 555 Prepaid insurance Wages expense 500 500 Wages payable Depreciation expense-computer equipment 1250 1250 Accumulated depreciation-computer equipment 400 Depreciation expense-office equipment 400 Accumulated depreciation office equipment 2475 Rent expense 2475 Prepaid rent

3. Prepare an adjusted trial balance as of December 31, 2011. (The items in the Trial Balance should be grouped as follows: Assets and Liabilities (in order of their liquidity) then Equity, Revenues, and Expenses. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.) BUSINESS SOLUTIONS Adjusted Trial Balance December 31, 2011 Credit Debit 48372 $ $ 0 Cash 5668 0 Accounts receivable V 580 0 Computer supplies 1,665 0 Prepaid insurance 825 0 Prepaid rent 8,000 0 Office equipment 0 400 Accumulated depreciation-office equipment 20000 0 Computer equipment 0 1250 Accumulated depreciation-computer equipment 0 1100 Accounts payable 0 500 Wages payable 0 > 1500 Unearned computer services revenue 0 > 73000 Common stock 7100 0 Dividends 0 31284 Computer services revenue 400 0 Depreciation expense-office equipment 1,250 0 Depreciation expense-computer equipment 3,875 0 Wages expense 555 0 Insurance expense 2,475 0 Rent expense 3,065 0 Computer supplies expense 2,753 0 Advertising expense V 896 0 Mileage expense 250 0 Miscellaneous expenses 1,305 0 Repairs expense-computer $ 109034 $ 109034 Totals

4. Prepare an income statement for the three months ended December 31, 2011. (Input all amounts as nositive values Omit the "$" sign in your response.) Check Your Work BUSINESS SOLUTIONS Income Statement For Three Months Ended December 31, 2011 Debit Credit Revenue $ 31284 Computer services revenue Expenses Depreciation expense-office equipment $ 400 1,250 Depreciation expense-computer equipment 3,875 Wages expense V 555 Insurance expense 2,475 Rent expense 3,065 Computer supplies expense 2,753 Advertising expense 896 Mileage expense 250 Miscellaneous expenses V 1,305 Repairs expense-computer 16824 Total expenses $ 14460 Net income

5. Prepare a statement of retained earnings for the three months ended December 31, 2011. (Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values. Omit the "$" sign in your response.) BUSINESS SOLUTIONS Statement of Retained Earnings For Three Months Ended December 31, 2011 $ Retained earnings, October 1, 2011 0 Add: Net income 14460 14460 Less: Dividends V 7100 $ 7360 Retained earnings, December 31, 2011 6. Prepare a balance sheet as of December 31, 2011. (Be sure to list the assets and liabilities in order of their liquidity. Amounts to be deducted should be indicated with minus sign. Omit the "$" sign in your response.) BUSINESS SOLUTIONS Balance Sheet December 31, 2011 Assets $ 48372 Cash 5668 Accounts receivable Prepaid insurance Prepaid rent Computer supplies 1,665 825 580 * * * $ 8000 Office equipment Accumulated depreciation-office equipment -400 7600 Computer equipment 20000 Check Your Work Accumulated depreciation-computer equipment -1250 18750 83460 Total Assets Liabilities $ 1100 Accounts payable Wages payable Unearned computer services revenue > >> 500 1,500 3100 Total Liabilities Equity Common stock 73000 Retained earnings 7360 Total Equity 80360 $ 83460 Total Liabilities and Equity

7. Record and post the necessary closing entries for Business Solutions. (Omit the "$" sign in your response.) Date Debit Credit General Journal Computer services revenue Dec. 31, 2011 31284 Income summary 31284 Income summary Dec. 31, 2011 16824 Depreciation expense-office equipment 400 Depreciation expense-computer equipment 1,250 Wages expense 3,875 Insurance expense 555 Rent expense 2,475 Computer supplies expense 3,065 Advertising expense 2,753 Mileage expense v 896 Miscellaneous expenses 250 Repairs expense-computer 1,305 Income summary Dec. 31, 2011 14460 Retained earnings 14460 Retained earnings Dec. 31, 2011 7100 Dividends 7100 8. Prepare a post-closing trial balance as of December 31, 2011. (The items in the Trial Balance should be grouped as follows: Assets and Liabilities in order of their liquidity) then Equity, Revenues, and Expenses. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.) BUSINESS SOLUTIONS Post-Closing Trial Balance December 31, 2011 Check Your Work Credit Debit 48372 $ 0 . Cash 5668 0 Accounts receivable 0 Computer supplies 580 0 Prepaid insurance 1,665 0 Prepaid rent 825 0 Office equipment 8,000 0 $ 400 Accumulated depreciation office equipment 20000 0 Computer equipment 0 1250 Accumulated depreciation-computer equipment 0 1100 Accounts payable o 500 Wages payable 0 1500 Unearned computer services revenue 0 73000 Common stock 0 7360 Retained earnings $ 85110 $ 85110 Totals