unadjusted trial balance of Business Solutions (reflecting its transactions for

Question

unadjusted trial balance of Business Solutions (reflecting its transactions for October and November of 2017) follows. Account Title No 101 Cash 106 Accounts receivable 126 Computer supplies 128 Prepaid insurance 131 Prepaid rent 163 Office equipment 164 Accumulated depreciation-Office equipment 167 Computer equipment 168 Accumulated depreciation-Computer equipment 201 Accounts payable 210 Wages payable 236 Unearned computer services revenue 307 Common stock 318 Retained earnings 319 Dividends 403 Computer services revenue 612 Depreciation expense-Office equipment 613 Depreciation expense-Computer equipment 623 Wages expense 63/Insurance expense 640 Rent expense 652 Computer supplies expense 655 Advertising expense 676 Mileage expense 677 Miscellaneous expenses 684 Repairs expense-Computer $ 38,764 13,018 2,645 2,100 3,060 8,900 20,800 65,000 6,400 36,134 2,150 1,688 664 170 775 Totals $101,134 $101,134

Explanation / Answer

1) Prepare journal entrie to record each of the december transaction and events for business solution

Answer :-

Dec 2 - Paid $1,010 cash to hillside mall for business solutions share of mall advertising costs

Journal Adverstising costs A/c Dr $1,010

To Cash A/c Cr $1,010

Dec 3 - Paid $480 cash for minor repairs to the company's computer

Journal Repairs expense A/c Dr $480

To Cash A/c Cr $480

Dec 4 Received $4,650 cash from Alex's Engineering co. for the receivable from November

Journal Cash A/c Dr $4,650

To Account receivable A/c Cr $4,650

( since in November we have already booked journal stating receivable from Alex Engineering co and now in december we are accounting for the cash received)

Dec 10 Paid cash to Lyn Addie for six days of work at the rate of $110 per day

Journal wage expense A/c Dr $ 660

To Cash A/c Cr $660

Dec 14 Notified by Alex Engineering co. that business solution bid of $7,900 on a proposed project has been accepted. Alex's paid a $1,800 cash advance to business solutions.

Journal cash A/c Dr $1,800

Cr Unearned service revenue A/c Cr $1,800

( Since cash was paid in advance for the project)

Dec 15 Purchased $1,900 of computer supplies on credit from harris office products

Purchase computer supplies A/c Dr $1,900

Cr Accounts payable A/c Cr $1,900

( purchase was done on credit hence payable was created with Harris office products account was credited)

Dec 16 Sent a remider to Gomex co. to pay the fee for services recorded on November 8

( No journal need to be recorded as it is just a reminder to pay for the services fee)

Dec 20 Completed a project for liu corporation and received $5,725 cash

Journal Cash A/c Dr $5,725

Cr computer service revenue A/c Cr $5,725

Dec 22 & 26 No Journal required.

Dec 28 Received $3,700 cash from gomez co. on its receivable

Journal Cash A/c Dr $3,700

To Accounts receivable. A/c Cr $3,700

Dec 29 reimbursed s.Rey for business automobile mileage ( 400 miles at $0.30 per mile)

Travel expense A/c Dr $120

Cr Cash A/c Cr $120

(since amount was reimbursed for travel related expense hence travel expense account was debited)

Dec 31 The company paid $1,300 cash in dividends

Dividends Payable A/c dr $1,300

Cr Cash A/c cr $1,300

(Since when dividend is declared we debit the retained earning account and credit the dividends payable account

and when we pay the dividend then the above journal entry is posted)

Adjusting journal entries

a) The December 31 inventor count of computer supplies show $640 still available

Journal Computer supplies expense A/c dr $ 3,905
Cr computer supplies Cr $ 3,905

(computer supplies available was $2,645 and later $1,900 of computer supplies was purchased and now $640 still available so $2645+$1,900-$640=$3,905 computer supplies was expensed out)

b) Three months have expired since the 12 month insurance premium was paid in advance

Insurance expense A/c dr $525
Prepaid Insurance A/c Cr $525

(Since three month insurance premium have accrued so it need to be expensed out, 2100 divided by 12 and multiplied by 3)

c) as of December 31, Lyn addie has not been paid for four days of work at $110 per day

wage expense A/c dr $440
wage payable A/c Cr $440

(since four days of wage still need to be paid and it is a liability for the company hence wage payable account was credited)

d) The computer system acquired on October 1, is expected to have a four year life with no salvage value

Depreciation expense-computer equipment A/c dr 1,300
Accumulated depreciation expense-computer equipment A/c Cr $1,300

( Computer equipment value to be depreciated for 3 month of life which has expired, so (20,800/4)=5200, 5,200/12*3=$1,300

e) The office equipment, acquired on october , is expected to have a five year life with no salvage value

Depreciation expense-office equipment A/c dr $445
Accumulated depreciation expense-office equipment A/c Cr $445

( office equipment value to be depreciated for 3 month of life which has expired, so (8900/5)=1,780, 1780/12*3=$445

f) three of the four months prepaid rent has expired

Rent expense A/c dr $2,295
Prepaid rent A/c Cr $2,295

( Rent of 3 months need to be expense out )

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