Question

Serial Problem Business Solutions LO P1, P2, P3, P4, P5, P6

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.

 

No.	Account Title	Debit			Credit
101	Cash	$	39,064
106	Accounts receivable		13,318
126	Computer supplies		2,545
128	Prepaid insurance		2,160
131	Prepaid rent		3,000
163	Office equipment		8,200
164	Accumulated depreciation—Office equipment				$	0
167	Computer equipment		20,000
168	Accumulated depreciation—Computer equipment					0
201	Accounts payable					0
210	Wages payable					0
236	Unearned computer services revenue					0
307	Common stock					68,000
318	Retained earnings					0
319	Dividends		5,800
403	Computer services revenue					31,759
612	Depreciation expense—Office equipment		0
613	Depreciation expense—Computer equipment		0
623	Wages expense		2,475
637	Insurance expense		0
640	Rent expense		0
652	Computer supplies expense		0
655	Advertising expense		1,648
676	Mileage expense		634
677	Miscellaneous expenses		200
684	Repairs expense—Computer		715
	Totals	$	99,759		$	99,759

 

Business Solutions had the following transactions and events in December 2019.   

 

Dec.	2		Paid $1,020 cash to Hillside Mall for Business Solutions’ share of mall advertising costs.
	3		Paid $410 cash for minor repairs to the company’s computer.
	4		Received $4,850 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 $105 per day.
	14		Notified by Alex’s Engineering Co. that Business Solutions’ bid of $7,100 on a proposed project has been accepted. Alex’s paid a $2,100 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 8.
	20		Completed a project for Liu Corporation and received $5,975 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 mile).
	31		The company paid $1,000 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 $660 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 $105 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 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 2B.
8. Prepare a post-closing trial balance as of December 31, 2019.

Please help me! I've done the first 2 but the rest I've gotten wrong over and over again! 

Answer 1

Business Solutions Journal Enteries Date Particulars 2.12.2020 Advertising expense a/c To Cash (Being Advertising expense paid in Cash) Debit in $Credit in $ 1020 Dr. 1020 410 3.12.2020 Repairs expense - computer a/c Dr. To Cash (Being Computer repairs incurred in cash) 410 4850 4.12.2020 Cash a/c Dr. To Accounts Receivable (Being Cash received in Debtors) 4850 630 10.12.2020 Wage expense a/c Dr. To Cash (Being Wages paid in Lyn Addie) 630 2100 14.12.2020 Cash a/c Dr. To Unearned Computer service revenue (Being Cash received in advance from clients) 2100 Dr. 1100 15.12.2020 Computer Supplies a/c To Accounts Payable (Being Computer Supplies purchased on account) 1100 16.12.2020 No Entry 5975 20.12.2020 Cash a/c Dr. To Computer Services Revenue (Being Cash received for project completed) 5975 3000 28.12.2020 Cash a/c Dr. To Accounts Receivable (Being Cash received from Debtors) 3000 192 192 29.12.2020 Mileage expense a/c Dr. To Cash (Being Mileage expense paid in cash) 600 x 0.32 31.12.2020 Dividends a/c Dr. To Cash (Being Dividends paid in cash) 1000 1000

Adjustment enteries Date Particulars 31.12.2020 Computer supplies expense a/c Dr. To Computer Supplies Debit in $Credit in $ 2965 2965 (Being Computer Supplies Expense charged to Computer Supplies) Dr. 540 31.12.2020 Insurance expense a/c To Prepaid Insurance 540 (Being Insurance expense charged to Prepaid Insurance) Dr. 420 31.12.2020 Wage expense a/c To Wages Payable (Being Wages accrued) 420 1250 31.12.2020 Depreciation - Computer a/c Dr. To Accumulated Depreciation - Computer 1250 (Being Depreciation charged to Computer Equip.) 410 31.12.2020 Depreciation - office equip a/c Dr. To Accumulated Depreciation - Office Equip 410 (Being Depreciation charged to Office Equip.) Dr. 2250 31.12.2020 Rent expense a/c To Prepaid Rent 2250 (Being Rent expense charged to Prepaid Rent) Debit in $Credit in $ 15759 Closing Enteries Date Particulars 31.12.2020 Income Summary a/c Dr. To Depreciation - office equip To Depreciation - Computer To Wage expense To Insurance expense To Rent expense To Computer supplies expense To Advertising expense To Mileage expense To Miscellaneous expense To Repairs expense - computer 410 1250 3525 540 2250 2965 2668 826 200 1125 Dr. 37734 31.12.2020 Computer Service Revenue a/c To Income Summary 37734 Dr. 21975 31.12.2020 Income Summary a/c To Retained earnings 21975 Dr. 6800 31.12.2020 Retained Earnings a/c To Divdends 6800

Unadjusted Trial Balance As at 31.12.2020 Unadjusted Adjustment Adjusted Post Closing Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ 51737 51737 51737 5468 5468 5468 3645 2965 680 680 2160 540 1620 1620 3000 2250 750 750 8200 8200 8200 0 410 410 410 20000 20000 20000 0 1250 1250 1250 1100 420 1100 0 2100 1100 420 420 2100 2100 68000 68000 No. Particulars 101 Cash 106 Accounts Receivable 126 Computer Supplies 128 Prepaid Insurance 131 Prepaid Rent 163 Office Equipment 164 Accumulated Depreciation - Off. Equip 167 Computer Equipment 168 Accumulated Depreciation - Computer 201 Accounts Payable 210 Wages Payable 236 Unearned Computer service Revenue 307 Common Stock 318 Retained Earnings 319 Dividends 403 Computer Service Revenue 612 Depreciation - office equip 613 Depreciation - Computer 623 Wage expense 637 Insurance expense 640 Rent expense 652 Computer supplies expense 655 Advertising expense 676 Mileage expense 677 Miscellaneous expense 684 Repairs expense - computer Totals 68000 15175 0 6800 6800 37734 37734 0 410 410 0 1250 1250 3105 420 3525 540 0 540 0 2250 2250 2965 2965 0 2668 826 200 1125 2668 826 200 1125 108934 108934 7835 7835 111014 111014 88455 88455

37734 Amounts in $ Amounts in $ 410 Balance sheet As at 31.12.2020 Assets Current Assets Cash Accounts Receivable Computer Supplies Prepaid Insurance Prepaid Rent 1100 5468 Statement of Income For the period ending 31.12.2020 Computer Service Revenue Less: Depreciation - office equip Depreciation - Computer Wage expense Insurance expense Rent expense Computer supplies expense Advertising expense Mileage expense Miscellaneous expense Repairs expense - computer Net Income Amounts in $ Amounts in $ Liabilities Current Liabilities 51737 Accounts Payable Wages Payable 680 Unearned Computer service Revenue 1620 750 60255 420 2100 3620 1250 3525 540 2250 2965 2668 826 8200 200 1125 Non Current Assets Office Equipment Accumulated Depreciatior Computer Equipment Accumulated Depreciation Total Assets 15759 21975 -410 20000 - 1250 7790 Shareholders Equity Common Stock 18750 Retained Earnings 86795 Total Liabilities & Shareholders Equity 68000 15175 83175 86795 0 Statement of Retained Earnings For the period ending 31.12.2020 Beginning Balance Net Income Dividends 31.12.2020 21975 -6800 15175