Online Security Buddies provides consulting services to small businesses that require computer security but are too small to have their own IT person on staff. The business had the following account balances:

The following transactions occurred during December:

a. On December 1, paid $11,500 cash to an advertising firm for 4 months of advertising work in advance.

b. On December 6, supplies in the amount of $3,700 were purchased on account.

c. On December 15, the company received a cash advance of $8,000 for work to be performed starting January 1, 2024.

d. On December 29, the company provided consulting services to a customer for $15,000, to be paid in 30 days.

The following information was available on December 31, 2023:

a. A physical count shows $7,600 of supplies remaining on hand on December 31.

b. The server equipment has an expected useful life of 8 years with no expected value after 8 years. The server equipment was purchased on January 2, and the straight-line method of amortization is used.

c. The computer equipment, purchased on January 2, is expected to be used for 4 years with no expected value after 4 years. The straight-line method of amortization is used.

d. The advertising firm has performed one-quarter of the work on the December 1 contract.

e. The company’s senior consultant, who earns $800 per day, worked the last 6 days of the year and will be paid on January 4, 2024.

Required

1. Journalize the entries. Add new accounts if necessary.

2. Prepare an adjusted trial balance on December 31, 2023. List expenses in the order of dollar amount, from the greatest amount to the smallest.

3. Prepare an income statement for the year ended December 31, 2023. List expenses in the order of dollar amount, from the greatest amount to the smallest.

4. Prepare a statement of owner’s equity for the year ended December 31, 2023. Assume there have been no changes to the capital account since January 1.

5. Prepare a balance sheet at December 31, 2023.

Transcribed Image Text:

Account Title Cash Accounts receivable Supplies Prepaid advertising ONLINE SECURITY BUDDIES Unadjusted Trial Balance December 1, 2023 Computer equipment Accumulated amortization-computer equipment Server equipment Accumulated amortization-server equipment Accounts payable 1. Steele, capital 1. Steele, withdrawals Consulting revenue Salaries expense Supplies expense Utilities expense Total Debit $ 19,000 23,200 5,000 1,500 69,000 288,000 79,000 120,000 Credit 0 0 93,600 186,000 342,500 17,400 $622,100 $622,100