On October 1, 2017, Santana Rey launched a computer services company called Busi

Question

On October 1, 2017, Santana Rey launched a computer services company called Business Solutions, which provides consulting services, computer system installations, and custom program development. Rey adopts the calendar year for reporting purposes and expects to prepare the company’s first set of financial statements on December 31, 2017. The company’s initial chart of accounts follows.

S. Rey invested $52,000 cash, a $22,000 computer system, and $8,000 of office equipment in the company.

The company paid $2,100 cash for one year's premium on a property and liability insurance policy. (Hint: Debit Prepaid Insurance for $2,100.)

The company paid $1,330 cash for the computer supplies purchased from Harris Office Products on October 3.

The company reimbursed S. Rey in cash for business automobile mileage allowance (Rey logged 1,000 miles at $0.24 per mile).

The company received notification from Alex’s Engineering Co. that Business Solutions’s bid of $4,750 for an upcoming project was accepted.

The company reimbursed S. Rey in cash for business automobile mileage (1,200 miles at $0.24 per mile).

Required:

1. Prepare journal entries to record each of the above transactions for Business Solutions.
2. Prepare ledger accounts (in balance column format) and post the journal entries from requirement 1 to them.
3. Prepare a trial balance as of the end of November.

Account No. Account No. Cash 101 S. Rey, Capital 301 Accounts Receivable 106 S. Rey, Withdrawals 302 Computer Supplies 126 Computer Services Revenue 403 Prepaid Insurance 128 Wages Expense 623 Prepaid Rent 131 Advertising Expense 655 Office Equipment 163 Mileage Expense 676 Computer Equipment 167 Miscellaneous Expenses 677 Accounts Payable 201 Repairs Expense—Computer 684 Prepare ledger accounts (in balance column format) and post the journal entries from requirement 1 to them 101: Cash 106: Accounts Receivable Date Debit Credit Balance Date Debit Credit Balance Oct. 1 Oct. 2 Oct. 5 Oct. 8 Oct. 15 Oct. 17 Oct. 20 Oct. 22 Oct. 31 Oct. 31 Nov. 1 OV Nov. 2 Nov. 5 Nov. 18 Nov. 22 ov. 28 Nov. 30 Nov. 30

Explanation / Answer

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BUSINESS SOLUTIONS Journal Entries for the months of October and November 2017 Date Account & Desrcipiton Ref Debit Credit 2017 Oct.1 Cash 101 52000 Computer equipment 167 22000 Office equipment 163 8000 S.Rey Capital 301 82000 (Capital brought in by Santana Rey) Oct.2 Prepaid Rent 131 3260 Cash 101 3260 (Payment of rent for four months ) Oct.3 Computer supplies 126 1330 Accounts Payable 201 1330 (Purchase of computer supplies from Harris Office Products) Oct.5 Prepaid insurance 128 2100 Cash 101 2100 (One year Property and liability) insurance piad) Oct.6 Accounts Receivable 106 5100 Computer service revenue 403 5100 (Service Invoice for Easy Leasing) Oct.8 Accounts Payable 201 1330 Cash 101 1330 (Payment made to Harris Office Products on account) Oct.10 No entry required Oct.12 Accounts Receivable 106 1900 Computer service revenue 403 1900 (Service Invoice for Easy Leasing) Oct.15 Cash 101 5100 Accounts Receivable 106 5100 (Cash received from Easy Leasing on account) Oct.17 Repair expense - Computer 684 765 Cash 765 (Payment of cash for repair of comupter) Oct.20 Advertisement expense 655 1708 Cash 101 1708 (Payment of newspaper advertisement expense) Oct.22 Cash 101 1900 Accounts Receivable 106 1900 (Cash received from Easy Leasing on account) Oct.28 Accounts Receivable 106 6008 Computer service revenue 403 6008 (Service Invoice for IFM Company) Oct.31 Wages expense 623 875 Cash 101 875 (Payment of wages to Lyn Addie for seven days work) Oct.31 S. Rey - Drawnings 302 3000 Cash 101 3000 (Cash withdrawn by S.Rey) Nov.1 Mileage expense 676 240 Cash 101 240 (Reimbursement of mileage expense to Mr. S.Rey) Nov.2 Cash 101 5033 Computer service revenue 403 5033 (Cash received from Liu Corporation) Nov.5 Computer supplies 126 1050 Cash 101 1050 (Cash payment for purchase of computer supplies) Nov.8 Accounts Receivable 106 6068 Computer service revenue 403 6068 (Service invoice for Gomez Co.) Nov.13 No entry required Nov.18 Cash 101 2208 Accounts Receivable 106 2208 (On account payment received from IFM Co.) Nov.22 Miscellaneous expenses 677 240 Cash 101 240 (Payment towards donation) Nov.24 Accounts Receivable 106 4750 Computer service revenue 403 4750 (Service invoice for Alex Enginering Co.) Nov.25 Accounts Receivable 106 3800 Computer service revenue 403 3800 (Service invoice for IFM Co.) Nov.28 Mileage expense 676 288 Cash 101 288 (Reimbursement of mileage expense to Mr. S.Rey) Nov.30 Wages expense 623 1750 Cash 101 1750 (Payment of wages to Lyn Addie forfourteen days work) Nov.30 S. Rey - Drawnings 302 1700 Cash 101 1700 (Cash withdrawn by S.Rey)

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