On October 1, 2015, Santana Rey launched a computer services company called Busi

Question

On October 1, 2015, 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, 2015. The company’s initial chart of accounts follows. Account No. Account No. Cash 101 Common Stock 307 Accounts Receivable 106 Dividends 319 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 -------------------------------------------------------------------------------- Oct. 1 S. Rey invested $45,000 cash, a $20,000 computer system, and $8,000 of office equipment in the company in exchange for its common stock. 2 The company paid $3,300 cash for four months’ rent. (Hint: Debit Prepaid Rent for $3,300.) 3 The company purchased $1,420 of computer supplies on credit from Harris Office Products. 5 The company paid $2,220 cash for one year’s premium on a property and liability insurance policy. (Hint: Debit Prepaid Insurance for $2,220.) 6 The company billed Easy Leasing $4,800 for services performed in installing a new Web server. 8 The company paid $1,420 cash for the computer supplies purchased from Harris Office Products on October 3. 10 The company hired Lyn Addie as a part-time assistant for $125 per day, as needed. 12 The company billed Easy Leasing another $1,400 for services performed. 15 The company received $4,800 cash from Easy Leasing as partial payment on its account. 17 The company paid $805 cash to repair computer equipment that was damaged when moving it. 20 The company paid $1,728 cash for advertisements published in the local newspaper. 22 The company received $1,400 cash from Easy Leasing on its account. 28 The company billed IFM Company $5,208 for services performed. 31 The company paid $875 cash for Lyn Addie's wages for seven days' work. 31 The company paid $3,600 cash in dividends. Nov. 1 The company reimbursed S. Rey in cash for business automobile mileage allowance (Rey logged 1,000 miles at $0.32 per mile). 2 The company received $4,633 cash from Liu Corporation for computer services performed. 5 The company purchased computer supplies for $1,125 cash from Harris Office Products. 8 The company billed Gomez Co. $5,668 for services performed. 13 The company received notification from Alex's Engineering Co. that Business Solutions' bid of $3,950 for an upcoming project is accepted. 18 The company received $2,208 cash from IFM Company as partial payment of the October 28 bill. 22 The company donated $250 cash to the United Way in the company's name. 24 The company completed work for Alex's Engineering Co. and sent it a bill for $3,950. 25 The company sent another bill to IFM Company for the past-due amount of $3,000. 28 The company reimbursed S. Rey in cash for business automobile mileage (1,200 miles at $0.32 per mile). 30 The company paid $1,750 cash for Lyn Addie's wages for 14 days' work. 30 The company paid $2,000 cash in dividends. How do you find the cash, account receivable, and computer services revenue in the trial balance?

Explanation / Answer

Month Date Account Head Folio no Debit $ Credit $ Oct. 1   S. Rey invested $45,000 cash, a $20,000 computer system, and $8,000 of office equipment in the company. Cash A/c 101 45000   Computer Equipment 167 20000 Office Equipment 163 8000 To S Ray's Capital a/c 301 73000 Oct. 2 The company paid $3,300 cash for four months’ rent. (Hint: Debit Prepaid Rent for $3,300.) Prepaid Rent 131 3300 Cash Ac count 101 3300 Oct. 3 The company purchased $1,420 of computer supplies on credit from Harris Office Products. Computer supplies 126 1420 Accounts Payable 201 1420 Oct. 5 The company paid $2,220 cash for one year’s premium on a property and liability insurance policy. (Hint: Debit Prepaid Insurance for $2,220.) Prepaid Insurance a/c 128 2220 Cash Ac count 101 2220 Oct. 6 The company billed Easy Leasing $4,800 for services performed in installing a new Web server.   Accounts Receivable 106 4800   Computer Services Revenue 403 4800 Oct. 8 The company paid $1,420 cash for the computer supplies purchased from Harris Office Products on October 3. Computer supplies 126 1420 Cash Ac count 101 1420 Oct. 10 The company hired Lyn Addie as a part-time assistant for $125 per day, as needed. No accounting entry required Oct. 12 The company billed Easy Leasing another $1,400 for services performed.   Accounts Receivable 106 1400   Computer Services Revenue 403 1400 Oct. 15 The company received $4,800 cash from Easy Leasing as partial payment on its account. Cash Ac count 101 4800   Accounts Receivable 106 4800 Oct. 17 The company paid $805 cash to repair computer equipment that was damaged when moving it.   Repairs Expense—Computer 684 805 Cash account 101 805 Oct. 20 The company paid $1,728 cash for advertisements published in the local newspaper.   Advertising Expense 655 1728 cash 101 1728 Oct. 22 The company received $1,400 cash from Easy Leasing on its account. Cash Ac count 101 1400   Accounts Receivable 106 1400 Oct. 28 The company billed IFM Company $5,208 for services performed.   Accounts Receivable 106 5208   Computer Services Revenue 403 5208 Oct. 31 The company paid $875 cash for Lyn Addie's wages for seven days' work.   Wages Expense 623 875 Cash 101 875 Oct. 31 S. Rey withdrew $3,600 cash from the company for personal use.   S. Rey, Withdrawals 302 3600 Cash 101 3600 Nov 1   The company reimbursed S. Rey in cash for business automobile mileage allowance (Rey logged 1,000 miles at $0.32 per mile).   Mileage Expense 676 320   Cash 101 320 Nov 2 The company received $4,633 cash from Liu Corporation for computer services performed.   Cash 101 4633   Computer Services Revenue 403 4633 Nov 5 The company purchased computer supplies for $1,125 cash from Harris Office Products.   Computer Supplies 126 1125   Cash 101 1125 Nov 8 The company billed Gomez Co. $5,668 for services performed.   Accounts Receivable 106 6668   Computer Services Revenue 403 6668 Nov 13 The company received notification from Alex's Engineering Co. that Business Solutions' bid of $3,950 for an upcoming project is accepted. No accounting entry required Nov 18 The company received $2,208 cash from IFM Company as partial payment of the October 28 bill.   Cash 101 2208   Accounts Receivable 106 2208 Nov 22 The company donated $250 cash to the United Way in the company's name.   Miscellaneous Expenses 677 250   Cash 101 250 Nov 24 The company completed work for Alex's Engineering Co. and sent it a bill for $3,950.   Accounts Receivable 106 3950   Computer Services Revenue 403 3950 Nov 25 The company sent another bill to IFM Company for the past-due amount of $3,000. No accounting entry required Nov 28 The company reimbursed S. Rey in cash for business automobile mileage (1,200 miles at $0.32 per mile).   Mileage Expense 676 384   Cash 101 384 Nov 30 The company paid $1,750 cash for Lyn Addie   Wages Expense 623 1750   Cash 101 1750 Nov 30 The company paid $1,750 cash for Lyn Addie's wages for 14 days' work   Wages Expense 623 1750   Cash 101 1750 Nov 30 S. Rey withdrew $2,000 cash from the company for personal use.   S. Rey, Withdrawals 302 2000   Cash 101 2000

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