Serial Problem Business Solutions LO P1, P2, P3, P4, P5 After the success of the
ID: 2430262 • Letter: S
Question
Serial Problem Business Solutions LO P1, P2, P3, P4, P5
After the success of the company’s first two months, Santana Rey continues to operate Business Solutions. The November 30, 2015, unadjusted trial balance of Business Solutions (reflecting its transactions for October and November of 2015) follows.
Notified by Alex’s Engineering Co. that Business Solutions’ bid of $7,600 on a proposed project has been accepted. Alex’s paid a $2,500 cash advance to Business Solutions.
The following additional facts are collected for use in making adjusting entries prior to preparing financial statements for the company’s first three months:
Prepare journal entries to record each of the December transactions and events for Business Solutions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Post the journal entries to record each of the December transactions, adjusting entries to the accounts in the ledger.
Prepare an adjusted trial balance as of December 31, 2015.
Prepare an income statement for the three months ended December 31, 2015.
Prepare a statement of owner’s equity for the three months ended December 31, 2015..
Prepare a balance sheet as of December 31, 2015.
Record and post the necessary closing entries for Business Solutions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
Prepare a post-closing trial balance as of December 31, 2015.
After the success of the company’s first two months, Santana Rey continues to operate Business Solutions. The November 30, 2015, unadjusted trial balance of Business Solutions (reflecting its transactions for October and November of 2015) follows.
Explanation / Answer
Answer 1. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 2-Dec Advertising Expenses 995.00 Cash 995.00 (record the advertising exp.) 3-Dec Repair Expense - Computer 460.00 Cash 460.00 (record the repair exp. - Computer) 4-Dec Cash 4,050.00 Accounts Receivable 4,050.00 (record the cash recevied) 10-Dec Wages Expense 690.00 Cash 690.00 (record the wage expense) 14-Dec Cash 2,500.00 Unearned Computer Service Revenue 2,500.00 (record the advance received) 15-Dec Computer Supplies 1,100.00 Accounts Payable 1,100.00 (record the supplies purchased on credit) 16-Dec No Entry 20-Dec Cash 5,775.00 Computer Service Revenue 5,775.00 (Record the revenue earnes) 22-Dec No Entry 28-Dec Cash 3,500.00 Accounts Receivable 3,500.00 (record the cash recd) 29-Dec Mileage Expense 160.00 Cash 160.00 (record the mileage expense) 31-Dec Dividends 1,300.00 Cash 1,300.00 (record the cash withdrawl) Answer 2-a Adjusting Journal Entry Date Particulars Dr. Amt. Cr. Amt a. Computer Supplies Expense 3,105.00 $3,745 - $640 Computer Supplies 3,105.00 (record the supplies expense) b. Insurance Expense 495.00 $1,980 X 3/12 Prepaid Insurance 495.00 (record the insurance Expense for 3 months) c. Wages Expense 460.00 $115 X 4 Wages Payable 460.00 (record the wages expense) d. Depreciation Expense - Computer Equip. 1,325.00 $21,200 / 4 Years X (3/12) Accum. Dep. - Comp. Equip 1,325.00 (record the dep. Expense) e. Depreciation Expense - Office Equip. 420.00 $8,400 / 5 Years X (3/12) Accum. Dep. - Office Equip 420.00 (record the dep. Expense) f. Rent Expense 2,220.00 $2,960 X 3/4 Prepaid Insurance 2,220.00 $2,960 X 3/4 (record the rent expense) Answer 2-b. Cash Accounts Receivable Computer Supplies Beg. Bal. 39,164.00 995.00 2-Dec Beg. Bal. 12,918.00 4,050.00 4-Dec Beg. Bal. 2,645.00 3,105.00 a. 4-Dec 4,050.00 460.00 3-Dec 3,500.00 28-Dec 15-Dec 1,100.00 14-Dec 2,500.00 690.00 10-Dec 20-Dec 5,775.00 160.00 29-Dec 28-Dec 3,500.00 1,300.00 31-Dec End. Bal. 51,384.00 End. Bal. 5,368.00 End. Bal. 640.00 Prepaid Insurance Prepaid Rent Office Equipment Beg. Bal. 1,980.00 495.00 b. Beg. Bal. 2,960.00 2,220.00 f. Beg. Bal. 8,400.00 End. Bal. 1,485.00 End. Bal. 740.00 End. Bal. 8,400.00 Accumulated Dep.- Equipment Computer Equipment Accumulated Dep.- Computer Equipment Beg. Bal. - Beg. Bal. 21,200.00 Beg. Bal. - 420.00 e. 1,325.00 d. End. Bal. 420.00 End. Bal. 21,200.00 End. Bal. 1,325.00 Accounts Payable Wages Payable Unearned Computer Service Revenue Beg. Bal. - Beg. Bal. - Beg. Bal. - 1,100.00 15-Dec 460.00 c. 2,500.00 14-Dec End. Bal. 1,100.00 End. Bal. 460.00 End. Bal. 2,500.00 Common Stock Dividends Computer Service Revenue Beg. Bal. 68,000.00 Beg. Bal. 6,400.00 Beg. Bal. 33,474.00 31-Dec 1,300.00 5,775.00 20-Dec End. Bal. 68,000.00 End. Bal. 7,700.00 End. Bal. 39,249.00 Dep. Exp. - Office Equipment Dep. Exp. - Computer Equipment Wages Expense Beg. Bal. - Beg. Bal. - Beg. Bal. 2,500.00 e. 420.00 d. 1,325.00 10-Dec 690.00 c. 460.00 End. Bal. 420.00 End. Bal. 1,325.00 End. Bal. 3,650.00 Insurance Expense Rent Expense Computer Supplies Expense Beg. Bal. - Beg. Bal. - Beg. Bal. - b. 495.00 f. 2,220.00 a. 3,105.00 End. Bal. 495.00 End. Bal. 2,220.00 End. Bal. 3,105.00 Advertising Expense Mileage Expense Misc. Expense Beg. Bal. 1,698.00 Beg. Bal. 694.00 Beg. Bal. 200.00 2-Dec 995.00 29-Dec 160.00 End. Bal. 2,693.00 End. Bal. 854.00 End. Bal. 200.00 Repair Expense - Computer Beg. Bal. 715.00 3-Dec 460.00 End. Bal. 1,175.00 Answer 3. Business Solution Adjusted Trial Balance Dec 31, 2015 Accounts Title Debits Credits Cash 51,384.00 Accounts Receivable 5,368.00 Computer Supplies 640.00 Prepaid Insurance 1,485.00 Prepaid Rent 740.00 Office Equipment 8,400.00 Accumulated Dep.- Equipment 420.00 Computer Equipment 21,200.00 Accumulated Dep.- Computer Equipment 1,325.00 Accounts Payable 1,100.00 Wages Payable 460.00 Unearned Computer Service Revenue 2,500.00 Common Stock 68,000.00 Dividends 7,700.00 Computer Service Revenue 39,249.00 Dep. Exp. - Office Equipment 420.00 Dep. Exp. - Computer Equipment 1,325.00 Wages Expense 3,650.00 Insurance Expense 495.00 Rent Expense 2,220.00 Computer Supplies Expense 3,105.00 Advertising Expense 2,693.00 Mileage Expense 854.00 Misc. Expense 200.00 Repair Expense - Computer 1,175.00 Total 113,054.00 113,054.00 - Answer 4. Business Solution Income Statement For Three Months Ended Dec 31, 2015 Revenues: Computer Service Revenue 39,249.00 Expenses Dep. Exp. - Office Equipment 420.00 Dep. Exp. - Computer Equipment 1,325.00 Wages Expense 3,650.00 Insurance Expense 495.00 Rent Expense 2,220.00 Computer Supplies Expense 3,105.00 Advertising Expense 2,693.00 Mileage Expense 854.00 Misc. Expense 200.00 Repair Expense - Computer 1,175.00 Total Expenses 16,137.00 Net Income (Loss) 23,112.00 Answer 5. Business Solution Statement of Retained Earnings For Three Months Ended Dec 31, 2015 Beginning Balance - Net Income (Loss) 23,112.00 Sub-total 23,112.00 Dividends (7,700.00) Ending Balance - Dec 31, 2016 15,412.00 Answer 6. Business Solution Balance Sheet Dec 31, 2017 Assets Current Assets Cash 51,384.00 Accounts Receivable 5,368.00 Computer Supplies 640.00 Prepaid Insurance 1,485.00 Prepaid Rent 740.00 Total Current Assets 59,617.00 Property, Plant & Equipment Office Equipment 8,400.00 Accumulated Dep.- Equipment (420.00) 7,980.00 Computer Equipment 21,200.00 Accumulated Dep.- Computer Equipment (1,325.00) 19,875.00 Total Property, Plant & Equipment 27,855.00 Total Assets 87,472.00 Liabilities & Owners' Equity Liabilities Current Liabilities Accounts Payable 1,100.00 Wages Payable 460.00 Unearned Computer Service Revenue 2,500.00 Total Current Liabilities 4,060.00 Long-Term Liabilities - Total Liabilities 4,060.00 Total StockHolders' Equity Common Stock 68,000.00 Retained Earnings 15,412.00 Total Stockholders' Equity 83,412.00 Total Liabilities & Stockholders' Equity 87,472.00 - Answer 8. Business Solution Closing Trial Balance Dec 31, 2016 Accounts Title Debits Credits Cash 51,384.00 Accounts Receivable 5,368.00 Computer Supplies 640.00 Prepaid Insurance 1,485.00 Prepaid Rent 740.00 Office Equipment 8,400.00 Accumulated Dep.- Equipment 420.00 Computer Equipment 21,200.00 Accumulated Dep.- Computer Equipment 1,325.00 Accounts Payable 1,100.00 Wages Payable 460.00 Unearned Computer Service Revenue 2,500.00 Common Stock 68,000.00 Retained Earnings 15,412.00 Total 89,217.00 89,217.00 Answer 7. Closing Journal Entry Date Particulars Dr. Amt. Cr. Amt a. Computer Service Revenue 39,249.00 Income Summary (Record to close the revenue accounts) b. Income Summary 16,137.00 Dep. Exp. - Office Equipment 420.00 Dep. Exp. - Computer Equipment 1,325.00 Wages Expense 3,650.00 Insurance Expense 495.00 Rent Expense 2,220.00 Computer Supplies Expense 3,105.00 Advertising Expense 2,693.00 Mileage Expense 854.00 Misc. Expense 200.00 Repair Expense - Computer 1,175.00 (Record to close the expense accounts) c. Income Summary 23,112.00 Retained Earnings 23,112.00 (Record to close the Income Summary) d. Retained Earnings 7,700.00 Dividends 7,700.00 (Record the close of dividends)
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