After the success of the company’s first two months, Adriana Lopez continues to operate...

After the success of the company’s first two months, Adriana Lopez continues to operate Success Systems. (Transactions for the first two months are described in the serial problem of Chapter 4.) The November 30, 2010, unadjusted trial balance of Success Systems (reflecting its transactions for October and November) follows.

Success Systems had the following transactions and events in December 2010.

Dec. 2 Paid $1,200 cash to Hilldale Mall for Success Systems’ share of mall advertising costs.

3 Paid $500 cash for minor repairs to the company’s computer.

4 Received $7,000 cash from Alex’s Engineering Co. for the receivable from November.

10 Paid cash to Michelle Jones for six days of work at the rate of $150 per day.

14 Notified by Alex’s Engineering Co. that Success’s bid of $9,000 on a proposed project has

been accepted. Alex’s paid a $2,500 cash advance to Success Systems.

15 Purchased $2,100 of computer supplies on credit from Cain Office Products.

16 Sent a reminder to Gomez Co. to pay the fee for services recorded on November 8.

20 Completed a project for Chang Corporation and received $3,620 cash.

22–26 Took the week off for the holidays.

26 Received $3,000 cash from Gomez Co. on its receivable.

26 Reimbursed Lopez’s business automobile mileage (800 miles at $0.32 per mile).

27 Lopez withdrew $2,000 cash for personal use.

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 count of computer supplies shows $775 still available.

b. Three months have expired since the 12-month insurance premium was paid in advance.

c. As of December 31, Michelle Jones has not been paid for four days of work at $150 per day.

d. The company’s computer is expected to have a five-year life with no salvage value.

e. The office equipment is expected to have a four-year life with no salvage value.

f. Three of the four months’ prepaid rent has expired.

Required

1. Prepare journal entries to record each of the December transactions and events for Success Systems. Post those entries to the accounts in the ledger.

2. Prepare adjusting entries to reflect a through f. Post those entries to the accounts in the ledger.

3. Prepare an adjusted trial balance as of December 31, 2010.

4. Prepare an income statement for the three months ended December 31, 2010.

5. Prepare a statement of owner’s equity for the three months ended December 31, 2010.

6. Prepare a balance sheet as of December 31, 2010.