With all of the transactions for the October-December 2021 period recorded, the company is facing their...

Transcribed Image Text:

With all of the transactions for the October-December 2021 period recorded, the company is facing their first year-end at December 31. 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 $850 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 five days of work at $150 per day. d. The computer system is expected to have a five-year life with no salvage value. e. The office equipment is expected to have a ten-year life with no salvage value. f. Three of the four months' prepaid rent has expired. g. A count of physical inventory at December 31 resulted in an ending value of $ 7,425. h. Management estimates that 10% of ending Accounts Receivable balance will be uncollectable. i. Interest on the short-term note payable will be paid at maturity (March 2, 2022). Please perform the following tasks: 1- Prepare the Adjusting Journal Entries at December 31, 2021 based on the information provided in a. through i. above and record them on the 2021 Trial Balance' worksheet and post them to the General Ledger. 2- Post the adjusting entries to the General Ledger and extend that data to compute the Adjusted Trial Balance on the 2021 Trial Balance worksheet. 3- From the Adjusted Trial Balance, prepare the four fundamental financial statements at December 31, 2021: a. Income Statement b. Statement of Retained Earnings c. Balance Sheet d. Statement of Cash Flows 4- Prepare the Closing Journal Entries, record them on the '2021 Trial Balance' worksheet and post the Closing Journal entries to the general ledger at December 31, 2021. 5- Extend closing entries to the post-closing trial balance columns on '2021 Trial Balance' worksheet. Important Note: If necessary, update your General Ledger to ensure balances agree with these check figures. You may do this by using Dec 31, 2021 as the date, Correct Balance as the item, and enter the correct balance in the balance column 3. (2 points) Use the additional information provided in the beginning of this document to prepare Adjusting Journal Entries at December 31, 2021. These entries should be recorded in your 2021 General Journal and then posted to the General Ledger. 4. (3 points) Record your adjusting entries to the 12-31-21 Trial Balance Excel worksheet and prepare the Adjusted Trial Balance as of December 31, 2021. You may want to create a formula in the adjusted balance column for each account. This formula should be such that if amounts in unadjusted column and/or the adjusting entry column changed, the adjusted balance would change. 5. (5 points) Prepare the following financial statements: a. Income statement for the three months ended December 31, 2021. b. Statement of retained earnings for the three months ended December 31, 2021. c. Balance sheet as of December 31, 2021. Note: Statements may be prepared in worksheet in your Excel file or manually and uploaded as a PDF to Canvas. 6. (2 points) Prepare and record closing entries in your 2021 General Journal and then post those entries to the General Ledger. 7. (3 points) Complete the 12-31-21 Trial Balance Excel spreadsheet through the closing process: a. Record closing entries prepared earlier in the closing entries' columns. b. You may want to use formulas to complete the post-closing trial balance. (These numbers should (must) agree with your General Ledger balances.) 8. (4 points) To ensure numbers have been carried over properly use the SUM formula to total your columns (2 points). Debit/credit columns must balance! Find and credit errors so they balance (2 points). The Chart of Accounts (modeled after the sample Chart of Accounts in handout) established by Computer Solutions is as follows: No. 101 Account Cash 106.1 A/R - Alex's Engineering Co. 106.2 A/R-Wildcat Services 106.3 A/R-West Leasing 106.4 A/R-IFM Co. 106.5 A/R-Liu Corp. 106.6 A/R-Gomez Co. 106.7 A/R-Delta Co. 106.8 A/R -KC, Inc. 106.9 107 119 126 128 131 163 164 Accumulated depreciation-Office equipment 167 Computer equipment 168 Accumulated depreciation-Computer equipment 201 203 210 236 240 245 A/R -Dream, Inc. Allowance for Doubtful Accounts Merchandise inventory Computer supplies Prepaid insurance Prepaid rent Office equipment Accounts payable Interest Payable Wages payable Unearned computer services revenue Short-Term Notes Payable Notes Payable No. Account 307 311 318 319 403 413 414 415 502 612 613 623 Wages expense 633 Interest expense 637 Insurance expense 640 Rent expense 652 Computer supplies expense 655 Advertising expense 656 Bad Debt Expense 676 Mileage expense 677 684 705 808 Common stock Paid In Capital in excess of par value Retained earnings Dividends Computer services revenue Sales Sales returns and allowances Sales discounts Cost of goods sold Depreciation expense-Office equipment Depreciation expense-Computer equipment Miscellaneous expenses Repairs expense-Computer Gain on Sale of Equipment Loss on Sale of Equipment 901 Income Summary No. 101 106.1 106.2 A/R -Wildcat Services 106.3 106.4 106.5 106.6 106.7 A/R-Delta Co 106.8 A/R-KC, Inc. 106.9 A/R -Dream, Inc. 107 Allowance for Doubtful Accounts 119 Merchandise inventory 126 128 131 163 164 Accumulated depreciation-Office equipment 167 Computer equipment 168 Accumulated depreciation-Computer equipment 201 203 210 236 240 245 Notes Payable 307 Common stock. 318 Retained earnings 319 Dividends Cash A/R- Alex's Engineering Co. A/R-West Leasing A/R-IFM Co. A/R -Liu Corp. A/R -Gomez Co. Computer supplies Prepaid insurance Prepaid rent Office equipment Accounts payable Interest Payable Wages payable Unearned computer services revenue Short-Term Notes Payable 403 Computer services revenue 413 414 415 502 Cost of goods sold 612 Depreciation expense-Office equipment 613 Depreciation expense-Computer equipment 623 633 637 Sales Sales returns and allowances Sales discounts Wages Expense Interest Expense Insurance Expense Rent Expense Computer Supplies Expense Advertising Expense Bad Debt Expense Mileage Expense Account 640 652 655 656 676 677 Miscellaneous Expenses 684 705 808 901 Repairs Expense-Computer Gain on Sale of Equipment Loss on Sale of Equipment Income Summary Totals unadjusted trial balance Debit Credit 103,550 3,000 2,750 4,200 3,200 7,861 3,775 4,380 4,500 5,000 39,000 7,900 600 43 6,650 4,200 2,400 576 400 1,305 205,290 1,100 3,000 50,000 102,000 38,540 10,650 205,290 With all of the transactions for the October-December 2021 period recorded, the company is facing their first year-end at December 31. 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 $850 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 five days of work at $150 per day. d. The computer system is expected to have a five-year life with no salvage value. e. The office equipment is expected to have a ten-year life with no salvage value. f. Three of the four months' prepaid rent has expired. g. A count of physical inventory at December 31 resulted in an ending value of $ 7,425. h. Management estimates that 10% of ending Accounts Receivable balance will be uncollectable. i. Interest on the short-term note payable will be paid at maturity (March 2, 2022). Please perform the following tasks: 1- Prepare the Adjusting Journal Entries at December 31, 2021 based on the information provided in a. through i. above and record them on the 2021 Trial Balance' worksheet and post them to the General Ledger. 2- Post the adjusting entries to the General Ledger and extend that data to compute the Adjusted Trial Balance on the 2021 Trial Balance worksheet. 3- From the Adjusted Trial Balance, prepare the four fundamental financial statements at December 31, 2021: a. Income Statement b. Statement of Retained Earnings c. Balance Sheet d. Statement of Cash Flows 4- Prepare the Closing Journal Entries, record them on the '2021 Trial Balance' worksheet and post the Closing Journal entries to the general ledger at December 31, 2021. 5- Extend closing entries to the post-closing trial balance columns on '2021 Trial Balance' worksheet. Important Note: If necessary, update your General Ledger to ensure balances agree with these check figures. You may do this by using Dec 31, 2021 as the date, Correct Balance as the item, and enter the correct balance in the balance column 3. (2 points) Use the additional information provided in the beginning of this document to prepare Adjusting Journal Entries at December 31, 2021. These entries should be recorded in your 2021 General Journal and then posted to the General Ledger. 4. (3 points) Record your adjusting entries to the 12-31-21 Trial Balance Excel worksheet and prepare the Adjusted Trial Balance as of December 31, 2021. You may want to create a formula in the adjusted balance column for each account. This formula should be such that if amounts in unadjusted column and/or the adjusting entry column changed, the adjusted balance would change. 5. (5 points) Prepare the following financial statements: a. Income statement for the three months ended December 31, 2021. b. Statement of retained earnings for the three months ended December 31, 2021. c. Balance sheet as of December 31, 2021. Note: Statements may be prepared in worksheet in your Excel file or manually and uploaded as a PDF to Canvas. 6. (2 points) Prepare and record closing entries in your 2021 General Journal and then post those entries to the General Ledger. 7. (3 points) Complete the 12-31-21 Trial Balance Excel spreadsheet through the closing process: a. Record closing entries prepared earlier in the closing entries' columns. b. You may want to use formulas to complete the post-closing trial balance. (These numbers should (must) agree with your General Ledger balances.) 8. (4 points) To ensure numbers have been carried over properly use the SUM formula to total your columns (2 points). Debit/credit columns must balance! Find and credit errors so they balance (2 points). The Chart of Accounts (modeled after the sample Chart of Accounts in handout) established by Computer Solutions is as follows: No. 101 Account Cash 106.1 A/R - Alex's Engineering Co. 106.2 A/R-Wildcat Services 106.3 A/R-West Leasing 106.4 A/R-IFM Co. 106.5 A/R-Liu Corp. 106.6 A/R-Gomez Co. 106.7 A/R-Delta Co. 106.8 A/R -KC, Inc. 106.9 107 119 126 128 131 163 164 Accumulated depreciation-Office equipment 167 Computer equipment 168 Accumulated depreciation-Computer equipment 201 203 210 236 240 245 A/R -Dream, Inc. Allowance for Doubtful Accounts Merchandise inventory Computer supplies Prepaid insurance Prepaid rent Office equipment Accounts payable Interest Payable Wages payable Unearned computer services revenue Short-Term Notes Payable Notes Payable No. Account 307 311 318 319 403 413 414 415 502 612 613 623 Wages expense 633 Interest expense 637 Insurance expense 640 Rent expense 652 Computer supplies expense 655 Advertising expense 656 Bad Debt Expense 676 Mileage expense 677 684 705 808 Common stock Paid In Capital in excess of par value Retained earnings Dividends Computer services revenue Sales Sales returns and allowances Sales discounts Cost of goods sold Depreciation expense-Office equipment Depreciation expense-Computer equipment Miscellaneous expenses Repairs expense-Computer Gain on Sale of Equipment Loss on Sale of Equipment 901 Income Summary No. 101 106.1 106.2 A/R -Wildcat Services 106.3 106.4 106.5 106.6 106.7 A/R-Delta Co 106.8 A/R-KC, Inc. 106.9 A/R -Dream, Inc. 107 Allowance for Doubtful Accounts 119 Merchandise inventory 126 128 131 163 164 Accumulated depreciation-Office equipment 167 Computer equipment 168 Accumulated depreciation-Computer equipment 201 203 210 236 240 245 Notes Payable 307 Common stock. 318 Retained earnings 319 Dividends Cash A/R- Alex's Engineering Co. A/R-West Leasing A/R-IFM Co. A/R -Liu Corp. A/R -Gomez Co. Computer supplies Prepaid insurance Prepaid rent Office equipment Accounts payable Interest Payable Wages payable Unearned computer services revenue Short-Term Notes Payable 403 Computer services revenue 413 414 415 502 Cost of goods sold 612 Depreciation expense-Office equipment 613 Depreciation expense-Computer equipment 623 633 637 Sales Sales returns and allowances Sales discounts Wages Expense Interest Expense Insurance Expense Rent Expense Computer Supplies Expense Advertising Expense Bad Debt Expense Mileage Expense Account 640 652 655 656 676 677 Miscellaneous Expenses 684 705 808 901 Repairs Expense-Computer Gain on Sale of Equipment Loss on Sale of Equipment Income Summary Totals unadjusted trial balance Debit Credit 103,550 3,000 2,750 4,200 3,200 7,861 3,775 4,380 4,500 5,000 39,000 7,900 600 43 6,650 4,200 2,400 576 400 1,305 205,290 1,100 3,000 50,000 102,000 38,540 10,650 205,290