Question

Saved Chapter 3 Homework 5 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 f. Three of the four months prepaid rent have expired. 50 points 02. 4750 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 2-b. Post the journal entries to record each of the December transactions from Requirement 1 and adjusting entries from Requirement 2A. After completing Requirement 7. post the closing entries to the general ledger accounts 3. Prepare an adjusted trial balance as of December 31, 2019 4. Prepare an income statement for the three months ended December 31, 2019 5. Prepare a statement of retained earnings for the three months ended December 31, 2019 6. Prepare a balance sheet as of December 31, 2019 7. Record the necessary closing entries as of December 31, 2019 and then post the closing entries to the general ledger in Requirement 28 8. Prepare a post-closing trial balance as of December 31, 2019 Print References Complete this question by entering your answers in the tabs below. Reg 28 Req 4 Regs Reg 6 Red 7 Req Reg 1 Reg 2 Req3 Prepare adjusting entries to reflect a through f. View transaction list View journal entry worksheet No Transaction General Journal Debit Credit

Answer 1

Prepare journal entries as follows:

Date	Account Titles	Debit	Credit
December
2	Advertising Expense	$1,025
	Cash		$1,025
3	Repair expense-computer	$500
	Cash		$500
4	Cash	$3,950
	Accounts Receivable		$3,950
10	Wages Expense	$750
	Cash [6 days × $125]		$750
14	Cash	$1,500
	Unearned computer service revenue		$1,500
15	Computer supplies	$1,100
	Accounts payable		$1,100
16	No entry
20	Cash	$5,625
	Computer service revenue		$5,625
22-26	No entry
28	Cash	$3,000
	Accounts Receivable		$3,000
29	Mileage expense [600 miles × $0.32]	$192
	Cash		$192
31	Dividends	$1,500
	Cash		$1,500

__________________________________________________________

Prepare adjusted entries as follows:

Date	Account Titles	Debit	Credit
Dec. 31	Adjusting Entry
a)	Computer supplies expense	$3,065
	Computer supplies [$2545 + $1100 - $580]		$3,065
b)	Insurance Expense	$555
	Prepaid Insurance [$2220/12] × 3		$555
c)	Wages Expense	$500
	Wages payable [4 days × $125]		$500
d)	Depreciation expense-computer equipment	$1,250
	Accumulated depreciation-computer equipment		$1,250
	[($20000 ÷ 4 years) × 3/12
e)	Depreciation expense-Office equipment	$400
	Accumulated depreciation-Office equipment		$400
	[($8000 ÷ 5 years) × 3/12]
f)	Rent Expense	$2,475
	Prepaid rent [$3300/4] × 3		$2,475

_______________________________________________________________

Ledger posting as follows:

Advertising Expense Date Debit Credit Beg. Bal. $1,728 2 $1,025 Balance $1,728 $2,753 Cash Date Debit Credit Balance Beg. Bal $38.264 $38.264 2 $1,025 $37.239 3 $500 $36.739 $3,950 $40,689 101 $750 $39,939 14 $1,500 $41.439 20 $5.625 $47,064 28 $3.000 $50,064 291 $192 $49.872 31 $1,500 $48,372 Date Repair Expense-computer Debit Credit Balance $805 $805 3 $500 $1,305 Beg Bal. Wages Expense Date Debit Credit Beg Bal $2.625 101 $750 Adj. c $500 Balance $2.625 $3,375 $3.875 Date Accounts payable Debit Credit Balance 15 $1,100 $1,100

Computer service revenue Date Debit Credit Balance Beg Bali $25,659 $25,659 20 $5,625 $31,284 Mileage Expense Date Debit Credit Beg Bal $704 29 $192 Balance $704 $896 Date Adj. b Insurance Expense Debit Credit $555 Balance $555 Prepaid Insurance Date Debit Credit Balance Beg. Bal $2,220 $2,220 Adj. b $555 $1,665 Depreciation expense-computer equipment Date Debit Credit Balance Adj. d $1,250 $1,250 Date Adj. f Rent Expense Debit Credit $2.475 Balance $2,475 Depreciation expense-Office equipment Date Debit Credit Balance Adj. e $400 $400 Accum. Deprn.-computer equipment Date Debit Credit Balance Adj. d $1,250 $1.250

Accum. Deprn.-office equipment Date Debit Credit Balance Adj. d $400 $400 Date Adj. a Computer supplies expense Debit Credit Balance $3,305 $3,305 Date Beg Bal 4) Accounts Receivable Debit Credit Balance $12,618 $12.618 $3,950 $8.668 $3,000 $5,668 Computer supplies Date Debit Credit Beg. Bal. $2,545 15) $1,100 Adj. a) $3,065 Balance $2.545 $3,645 $580 28) Wage Debit Date Beg Bal Adj. f Prepaid Rent Debit Credit Balance $3,300 $3,300 $2,475 $825 Date Adj. c ayable Credit Balance $500 $500 Unearned computer service revenue Date Debit Credit Balance $1,500 $1,500 Dividends Date Debit Credit Beg. Bal. $5.600 31) $1,500 14) Balance $5,600 $7.100

Date Beg. Bal Misc. Expense Debit Credit $250 Balance $250