After the success of the company's first two months, Santana Rey continues to operate Business Solutions....
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After the success of the company's first two months, Santana Rey continues to operate Business Solutions. The November 30, 2021, unadjusted trial balance of Business Solutions (reflecting its transactions for October and November of 2021) follows. Number Account Title 101 Cash Debit $ 38,364 Credit 106 Accounts receivable 13,318 126 Computer supplies 2,645 128 Prepaid insurance 2,220 131 Prepaid rent 2,960 163 Office equipment 8,700 164 Accumulated depreciation-Office equipment $ 0 167 Computer equipment 22,000 168 Accumulated depreciation-Computer equipment 201 Accounts payable 210 Wages payable 236 Unearned computer services revenue 307 Common stock 72,000 318 Retained earnings 319 Dividends 5,800 403 Computer services revenue 29,389 612 613 Depreciation expense-Office equipment Depreciation expense-Computer equipment 0 623 Wages expense 2,175 637 Insurance expense 640 Rent expense 0 652 Computer supplies expense 655 676 677 684 901 Advertising expense Mileage expense Miscellaneous expenses Income summary Totals 1,668 614 220 Repairs expense-Computer 705 $ 101,389 $ 101,389 Business Solutions had the following transactions and events in December 2021. December 2 Paid $990 cash to Hillside Mall for Business Solutions's share of mall advertising costs. December 3 Paid $470 cash for minor repairs to the company's computer. December 4 Received $4,450 cash from Alex's Engineering Company for the receivable from November. December 10 Paid cash to Lyn Addie for six days of work at the rate of $110 per day. December 14 Notified by Alex's Engineering Company that Business Solutions's bid of $7,100 on a proposed project has been accepted. Alex's paid a $1,700 cash advance to Business Solutions. December 15 Purchased $1,200 of computer supplies on credit from Harris Office Products. December 16 Sent a reminder to Gomez Company to pay the fee for services recorded on November 8. December 20 Completed a project for Liu Corporation and received $5,775 cash. December 22-26 Took the week off for the holidays. December 28 Received $3,300 cash from Gomez Company on its receivable. December 29 Reimbursed S. Rey for business automobile mileage (500 miles at $0.24 per mile). December 31 Paid $1,400 cash for 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. a. The December 31 inventory count of computer supplies shows $590 still available. b. Three months have expired since the 12-month insurance premium was paid in advance. c. As of December 31, Lyn Addie has not been paid for four days of work at $110 per day. d. The computer system, acquired on October 1, is expected to have a four-year life with no salvage value. e. The office equipment, acquired on October 1, is expected to have a five-year life with no salvage value. f. Three of the four months' prepaid rent have expired. Required: 1. Prepare journal entries to record each of the December transactions. Post those entries to the accounts in the ledger. 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, 2021. 4. Prepare an income statement for the three months ended December 31, 2021. 5. Prepare a statement of retained earnings for the three months ended December 31, 2021. 6. Prepare a classified balance sheet as of December 31, 2021. 7. Record the necessary closing entries as of December 31, 2021. 8. Prepare a post-closing trial balance as of December 31, 2021. Prepare a classified balance sheet as of December 31, 2021. BUSINESS SOLUTIONS Balance Sheet December 31, 2021 Assets Current assets Plant assets Total equity Total Liabilities and Equity 0 0 0 0 0 Liabilities Equity 0 69 $ 0 $ 0 Prepare a post-closing trial balance as of December 31, 2021. BUSINESS SOLUTIONS Post-Closing Trial Balance December 31, 2021 Totals Debit Credit FA $ 0 $ After the success of the company's first two months, Santana Rey continues to operate Business Solutions. The November 30, 2021, unadjusted trial balance of Business Solutions (reflecting its transactions for October and November of 2021) follows. Number Account Title 101 Cash Debit $ 38,364 Credit 106 Accounts receivable 13,318 126 Computer supplies 2,645 128 Prepaid insurance 2,220 131 Prepaid rent 2,960 163 Office equipment 8,700 164 Accumulated depreciation-Office equipment $ 0 167 Computer equipment 22,000 168 Accumulated depreciation-Computer equipment 201 Accounts payable 210 Wages payable 236 Unearned computer services revenue 307 Common stock 72,000 318 Retained earnings 319 Dividends 5,800 403 Computer services revenue 29,389 612 613 Depreciation expense-Office equipment Depreciation expense-Computer equipment 0 623 Wages expense 2,175 637 Insurance expense 640 Rent expense 0 652 Computer supplies expense 655 676 677 684 901 Advertising expense Mileage expense Miscellaneous expenses Income summary Totals 1,668 614 220 Repairs expense-Computer 705 $ 101,389 $ 101,389 Business Solutions had the following transactions and events in December 2021. December 2 Paid $990 cash to Hillside Mall for Business Solutions's share of mall advertising costs. December 3 Paid $470 cash for minor repairs to the company's computer. December 4 Received $4,450 cash from Alex's Engineering Company for the receivable from November. December 10 Paid cash to Lyn Addie for six days of work at the rate of $110 per day. December 14 Notified by Alex's Engineering Company that Business Solutions's bid of $7,100 on a proposed project has been accepted. Alex's paid a $1,700 cash advance to Business Solutions. December 15 Purchased $1,200 of computer supplies on credit from Harris Office Products. December 16 Sent a reminder to Gomez Company to pay the fee for services recorded on November 8. December 20 Completed a project for Liu Corporation and received $5,775 cash. December 22-26 Took the week off for the holidays. December 28 Received $3,300 cash from Gomez Company on its receivable. December 29 Reimbursed S. Rey for business automobile mileage (500 miles at $0.24 per mile). December 31 Paid $1,400 cash for 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. a. The December 31 inventory count of computer supplies shows $590 still available. b. Three months have expired since the 12-month insurance premium was paid in advance. c. As of December 31, Lyn Addie has not been paid for four days of work at $110 per day. d. The computer system, acquired on October 1, is expected to have a four-year life with no salvage value. e. The office equipment, acquired on October 1, is expected to have a five-year life with no salvage value. f. Three of the four months' prepaid rent have expired. Required: 1. Prepare journal entries to record each of the December transactions. Post those entries to the accounts in the ledger. 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, 2021. 4. Prepare an income statement for the three months ended December 31, 2021. 5. Prepare a statement of retained earnings for the three months ended December 31, 2021. 6. Prepare a classified balance sheet as of December 31, 2021. 7. Record the necessary closing entries as of December 31, 2021. 8. Prepare a post-closing trial balance as of December 31, 2021. Prepare a classified balance sheet as of December 31, 2021. BUSINESS SOLUTIONS Balance Sheet December 31, 2021 Assets Current assets Plant assets Total equity Total Liabilities and Equity 0 0 0 0 0 Liabilities Equity 0 69 $ 0 $ 0 Prepare a post-closing trial balance as of December 31, 2021. BUSINESS SOLUTIONS Post-Closing Trial Balance December 31, 2021 Totals Debit Credit FA $ 0 $
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