SP 4 On October 1, 2010, Adriana Lopez launched a computer services company called Succe...

SP 4 On October 1, 2010, Adriana Lopez launched a computer services company called Success Systems, which provides consulting services, computer system installations, and custom program development. Lopez adopts the calendar year for reporting purposes and expects to prepare the company’s first set of financial statements on December 31, 2010. The company’s initial chart of accounts follows.

Required

1. Prepare journal entries to record each of the following transactions for Success Systems.

Oct. 1 Lopez invested $75,000 cash, a $25,000 computer system, and $10,000 of office equipment in the business.

2 Paid $3,500 cash for four months’ rent. (Hint: Debit Prepaid Rent for $3,500.)

3 Purchased $1,600 of computer supplies on credit from Corvina Office Products.

5 Paid $2,400 cash for one year’s premium on a property and liability insurance policy. (Hint: Debit Prepaid Insurance for $2,400.)

6 Billed Easy Leasing $6,200 for services performed in installing a new Web server.

8 Paid $1,600 cash for the computer supplies purchased from Corvina Office Products on

October 3.

12 Billed Easy Leasing another $1,950 for services performed.

15 Received $6,200 cash from Easy Leasing on its account.

17 Paid $900 cash to repair computer equipment that was damaged when moving it.

20 Paid $1,790 cash for an advertisement in the local newspaper.

22 Received $1,950 cash from Easy Leasing on its account.

28 Billed Clark Company $7,300 for services performed.

31 Paid $1,050 cash for Michelle Jones’s wages for seven days’ work.

31 Lopez withdrew $4,000 cash for personal use.

Nov. 1 Reimbursed Lopez in cash for business automobile mileage allowance (Lopez logged 1,200

miles at $0.32 per mile).

2 Received $3,600 cash from Edge Corporation for computer services performed.

5 Purchased computer supplies for $1,750 cash from Corvina Office Products.

8 Billed Gomez Co. $6,500 for services performed.

18 Received $5,000 cash from Clark Company as partial payment of the October 28 bill.

22 Donated $300 cash to the United Way in the company’s name.

24 Completed work for Alex’s Engineering Co. and sent it a bill for $7,000.

28 Reimbursed Lopez in cash for business automobile mileage (1,500 miles at $0.32 per mile).

30 Paid $2,100 cash for Michelle Jones’s wages for 14 days’ work.

30 Lopez withdrew $2,500 cash for personal use.

2. Open ledger accounts (in balance column format) and post the journal entries from part 1 to them.

3. Prepare a trial balance (dated November 30, 2010) from the ending balances in the ledger accounts from part 1.