Question

After the success of the company’s first two months, Santana Rey continues to operate Business Solutions. The November 30, 2017, unadjusted trial balance of Business Solutions (reflecting its transactions for October and November of 2017) follows.

Even though it's filled out in places they are probably not the right answer.

No.	Account Title	Debit			Credit
101	Cash	$	38,964
106	Accounts receivable		12,818
126	Computer supplies		2,645
128	Prepaid insurance		1,920
131	Prepaid rent		2,920
163	Office equipment		8,700
164	Accumulated depreciation—Office equipment				$	0
167	Computer equipment		21,200
168	Accumulated depreciation—Computer equipment					0
201	Accounts payable					0
210	Wages payable					0
236	Unearned computer services revenue					0
307	Common stock					71,000
318	Retained earnings					0
319	Dividends		5,800
403	Computer services revenue					29,444
612	Depreciation expense—Office equipment		0
613	Depreciation expense—Computer equipment		0
623	Wages expense		2,150
637	Insurance expense		0
640	Rent expense		0
652	Computer supplies expense		0
655	Advertising expense		1,698
676	Mileage expense		644
677	Miscellaneous expenses		240
684	Repairs expense—Computer		745
	Totals	$	100,444		$	100,444

Business Solutions had the following transactions and events in December 2017.   

Dec.	2		Paid $955 cash to Hillside Mall for Business Solutions’ share of mall advertising costs.
	3		Paid $480 cash for minor repairs to the company’s computer.
	4		Received $4,350 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 $100 per day.
	14		Notified by Alex’s Engineering Co. that Business Solutions’ bid of $7,400 on a proposed project has been accepted. Alex’s paid a $1,800 cash advance to Business Solutions.
	15		Purchased $1,500 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 $6,375 cash.
	22–26		Took the week off for the holidays.
	28		Received $3,600 cash from Gomez Co. on its receivable.
	29		Reimbursed S. Rey for business automobile mileage (400 miles at $0.26 per mile).
	31		The company paid $1,400 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 $590 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 $100 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 has 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, 2017.
4. Prepare an income statement for the three months ended December 31, 2017.
5. Prepare a statement of retained earnings for the three months ended December 31, 2017.
6. Prepare a balance sheet as of December 31, 2017.
7. Record and post the necessary closing entries as of December 31, 2017.
8. Prepare a post-closing trial balance as of December 31, 2017.

1)

2)

2b)3)4)

5)

6)

7)

8)

6 Purchased $1,500 of computer supplies on credit from Harris Office Products 7 Sent a reminder to Gomez Co. to pay the fee for services recorded on November 8 8 Completed a project for Liu Corporation and received $6,375 cash 9 Received $3,600 cash from Gomez Co. on its receivable. 10 Reimbursed S. Rey for business automobile mileage (400 miles at $0.26 per mile) 11 The company paid $1,400 cash in dividends. 1 The December 31 inventory count of computer supplies shows $590 still available. 2 Three months have expired since the 12-month insurance premium was paid in advance. As of December 31, Lyn Addie has not been paid for four days of work at $100 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. Cash Accounts Receivable Credit Debit Credit Date Balance Date Debit Balance Dec. 01 Dec. 01 38,964 12,818 Dec. 02 Dec. 04 955 38,009 4,350 17,168 Dec. 03 Dec. 28 13,568 480 37,529 3,600 Dec. 04 4,350 33,179 Dec. 10 600 32,579 Dec. 14 1,800 34,379 Dec. 28 3,600 37,979 Dec. 29 104 37,875 Dec. 31 1,400 36,475 Computer Supplies Prepaid Insurance Date Debit Credit Balance Date Debit Credit Balance Dec. 01 2,645 Dec. 01 1,920 Dec. 15 Dec. 31 480 1,500 4,145 1,440 Office Equipment Prepaid Rent Date Debit Credit Balance Date Debit Credit Balance Dec. 01 2,920 Dec. 01 8,700 Dec. 31 2,190 730 Accumulated Depreciation-Office Equipment Computer Equipment Date Debit Credit Balance Date Debit Credit Balance Dec. 01 Dec. 01 21,200 Dec. 31 Dec. 31 3,480 3,480 590 20,610 Accumulated Depreciation-Computer Equipment Accounts Payable Date Debit Credit Balance Date Debit Credit Balance Dec. 01 0 Dec. 01 0 Wages Payable Unearned Computer Services Revenue Balance Date Debit Credit Balance Date Debit Credit Dec. 01 0 Dec. 01 0 Dec. 10 600 Dec. 14 (600) 1,800 1,800 Dec. 31 400 (200) Retained Earnings Common Stock Date Debit Credit Balance Date Debit Credit Balance Dec. 01 71,000 Dec. 01 Computer Services Revenue Dividends Date Debit Debit Credit Balance Date Credit Balance Dec. 01 29,444 5,800 Dec. 01 Dec. 31 1,400 7,200 Depreciation Expense-Office Equipment Depreciation Expense Computer Equipment Debit Credit Balance Date Debit Credit Balance Date Dec. 01 Dec. 01 0 0 Dec. 31 Dec. 31 3,480 3,480 750 750 Wages Expense Insurance Expense Date Debit Credit Balance Date Debit Credit Balance Dec. 01 2,150 Dec. 01 Dec. 31 Dec. 31 400 2,550 480 480 2,550 2,550 Rent Expense Computer Supplies Expentse Credit Debit Credit Date Debit Balance Date Balance Dec. 01 Dec. 01 Dec. 31 Dec. 31 590 2,190 590 2,190 BUSINESS SOLUTIONS Income Statement For Three Months Ended December 31, 2017 Revenue $ Computer services revenue 29,444 Expenses $ Depreciation expense-Office equipment 3,480 Depreciation expense Computer equipment 750 Wages expense 2,550 Insurance expense 480 Rent expense 2,190 Computer supplies expense 590 Advertising expense 2,653 Mileage expense 748 Repairs expense-Computer 1,225 Miscellaneous expenses 240 Total expenses 14,906 Net income 14,778

Answer 1

Business Solutions Journal Enteries Particulars 2.12.2017 Advertising expense a/c Debit in $ Credit in $ Date Dr. 955 To Cash 955 (Being Advertising expense paid in Cash) 3.12.2017 Repairs expense computer a/c Dr. 480 To Cash 480 (Being Computer repairs incurred in cash) 4.12.2017 Cash a/c Dr. 4350 To Accounts Receivable 4350 (Being Cash received in Debtors) 10.12.2017 Wage expense a/c Dr. 600 To Cash 600 (Being Wages paid in Lyn Addie) 14.12.2017 Cash a/c Dr. 1800 To Unearned Computer service revenue 1800 (Being Cash received in advance from clients) 15.12.2017 Computer Supplies a/c Dr. 1500 To Accounts Payable 1500 (Being Computer Supplies purchased on account) 16.12.2017 No Entry 20.12.2017 Cash a/c Dr. 6375 To Computer Services Revenue 6375 (Being Cash received for project completed) 28.12.2017 Cash a/c Dr. 3600 To Accounts Receivable 3600 (Being Cash received from Debtors) 29.12.2017 Mileage expense a/c Dr. 104 To Cash 104 (Being Mileage expense paid in cash) 400 x 0.26 31.12.2017 Dividends a/c Dr. 1400 To Cash 1400 (Being Dividends paid in cash)

Adjustment enteries Particulars Debit in $ Credit in $ Date 31.12.2017 Computer supplies expense a/c 3555 Dr. To Computer Supplies 3555 2645+1500-590 (Being Computer Supplies Expense charged to Computer Supplies) 31.12.2017 Insurance expense a/c Dr. 480 480 To Prepaid Insurance 1920 3/12 |(Being Insurance expense charged to Prepaid Insurance) 31.12.2017 Wage expense a/c Dr. 400 To Wages Payable (Being Wages accrued) 100 x 4 400 31.12.2017 Depreciation -Computer a/c Dr. 1325 1325 To Accumulated Depreciation - Computer 21200 3/(4*12 ) (Being Depreciation charged to Computer Equip.) 31.12.2017 Depreciation office equip a/c Dr. 435 To Accumulated Depreciation Office Equip 8700 3/(5 12 ) |(Being Depreciation charged to Office Equip.) 435 Rent expense a/c 31.12.2017 Dr 2190 2190 To Prepaid Rent 3920 х 3/4 |(Being Rent expense charged to Prepaid Rent) Closing Enteries Particulars Debit in $ Credit in $ 16001 Date 31.12.2017 Income Summary a/c Dr. To Depreciation - office equip 435 To Depreciation -Computer 1325 3150 To Wage expense To Insurance expense 480 2190 To Rent expense 3555 To Computer supplies expense To Advertising expense To Mileage expense To Miscellaneous expense 2653 748 240 1225 To Repairs expense - computer 35819 31.12.2017 Computer Service Revenue a/c Dr 35819 To Income Summary 31.12.2017 Income Summary a/c 19818 Dr. 19818 To Retained earnings 7200 31.12.2017 Retained Earnings a/c Dr 7200 To Divdends

Unadjusted Trial Balance Statement of Income For the period ending 31.12.2017 As at 31.12.2017 Debit in $ Credit in $ No. Particulars Computer Service Revenue 35819 Cash 51550 101 Less: Accounts Receivable Depreciation - office equip 106 4868 435 126 Computer Supplies 4145 Depreciation-Computer 1325 Prepaid Insurance 128 1920 Wage expense 3150 131 Prepaid Rent Insurance expense 2920 480 Office Equipment Accumulated Depreciaion - Off. Equip Rent expense 163 8700 2190 Computer supplies expense 164 0 3555 Advertising expense 167 Computer Equipment 21200 2653 Accumulated Depreciation Computer Mileage expense 168 0 748 Accounts Payable Miscellaneous expense 201 1500 240 Wages Payable 210 0 Repairs expense - computer 1225 16001 Unearned Computer service Revenue 236 1800 Net Income 19818 Common Stock 71000 307 Statement of Owners equity 318 Retained Earnings 0 319 Diivdends For the period ending 31.12.2017 7200 Retained Earnings Beg. 403 Computer Service Revenue 35819 0 Depreciation - office equip 612 0 Net Income 19818 Less:Dividends 613 Depreciation -Computer 0 -7200 623 Wage expense 2750 31.12.2017 12618 Insurance expense 637 Rent expense 640 0 Computer supplies expense 652 0 655 Advertising expense 2653 676 Mileage expense 748 677 Miscellaneous expense 240 684 Repairs expense computer 1225 Totals 110119 110119 O

Adjusted Trial Balance As at 31.12.2017 No. Particulars Debit in $ Credit in $ 101 Cash 51550 Accounts Receivable 4868 106 126 Computer Supplies 590 128 Prepaid Insurance 1440 131 Prepaid Rent 730 Office Equipment Accumulated Depreciation Off. Equip 8700 163 435 164 167 Computer Equipment 21200 Accumulated Depreciation Computer 1325 168 Accounts Payable 1500 201 210 Wages Payable 400 Unearned Computer service Revenue 236 1800 307 Common Stock 71000 Retained Earnings 318 Diivdends 319 7200 35819 403 Computer Service Revenue 612 Depreciation office equip 435 Depreciation-Computer 1325 613 623 Wage expense 3150 Insurance expense Rent expense 480 637 640 2190 Computer supplies expense Advertising expense 3555 652 655 2653 676 Mileage expense 748 Miscellaneous expense 240 677 1225 684 Repairs expense - computer Totals 112279 112279 Post Closing Trial Balance As at 31.12.2017 Debit in $ Credit in $ No. Particulars 101 Cash 51550 106 Accounts Receivable 4868 126 Computer Supplies 590 128 Prepaid Insurance 1440 131 Prepaid Rent 163 Office Equipment 730 8700 164 Accumulated Depreciation Off. Equip 435 21200 167 Computer Equipment 168 Accumulated Depreciation Computer 1325 201 Accounts Payable 1500 210 Wages Payable 400 236 Unearned Computer service Revenue 1800 307 Common Stock 71000 Retained Earnings 318 12618 Totals 89078 89078

Balance sheet As at 31.12.2017 Amounts in $ Amounts in $ Liabilities Amounts in $ Amounts in $ Assets Current Liabilities Current Assets Accounts Payable Cash 51550 1500 Accounts Receivable Wages Payable 4868 400 Computer Supplies Prepaid Insurance Unearned Computer service Revenue 590 1800 3700 1440 Prepaid Rent 730 59178 Shareholders Equity Non Current Assets Office Equipment Common Stock 8700 71000 Accumulated Depreciation 8265 Retained Earnings -435 12618 83618 21200 Computer Equipment Accumulated Depreciation -1325 19875 87318 Total Liabilities & Shareholders Equity Total Assets 87318