On October 1, 2017, Santana Rey launched a computer services company called Busi
ID: 2589816 • Letter: O
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.
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.
Explanation / Answer
Journal Entries Amount$ Amount$ Date Chart No Particulars Debit Credit Oct-01 101 Cash A/c Dr 46,000 167 Computer Equipment A/c Dr 29,000 163 Office Equipment A/c Dr 9,000 307 To Common Stock 84,000 Being S. Rey invested $46,000 cash, a $29,000 computer system, and $9,000 of office equipment in the company in exchange for its common stock. Oct-02 131 Prepaid Rent A/c Dr 3,260 101 To Cash A/c 3,260 Being The company paid $3,260 cash for four months' rent. (Hint: Debit Prepaid Rent for $3,260.) Oct-03 167 Computer Equipment A/c Dr 1,330 201 To Accounts Payable 1,330 Being The company purchased $1,330 of computer supplies on credit from Harris Office Products Oct-05 128 Prepaid Insurance 1,740 101 To Cash A/c 1,740 ( Being The company paid $1,740 cash for one year's premium on a property and liability insurance policy. (Hint: Debit Prepaid Insurance for $1,740.) Oct-06 106 Accounts Receivable Dr 5,700 403 To Computer Services Revenue A/c 5,700 Being The company billed Easy Leasing $5,700 for services performed in installing a new Web server) Oct-08 201 Accounts Payable A.c Dr 1,330 101 To Cash A/c 1,330 (Being The company paid $1,330 cash for the computer supplies purchased from Harris Office Products on October 3. ) Oct-10 Not yet Accrued - NO Entry Oct-12 106 Accounts Receivable Dr 1,700 403 To Computer Services Revenue A/c 1,700 The company billed Easy Leasing another $1,700 for services performed Oct-15 101 Cash A/c Dr 5,700 106 To Accounts Receivable 5,700 The company received $5,700 cash from Easy Leasing as partial payment on its account. Oct-17 684 Repairs Expense—Computer 770 101 To Cash A/c 770 The company paid $770 cash to repair computer equipment that was damaged when moving it Oct-20 655 Advertising Expense 1,703 101 To Cash A/c 1,703 The company paid $1,703 cash for advertisements published in the local newspaper. Oct-22 101 Cash A/c Dr 1,700 106 To Accounts Receivable 1,700 The company received $1,700 cash from Easy Leasing on its account. Oct-28 106 Accounts Receivable Dr 5,508 403 To Computer Services Revenue A/c 5,508 The company billed IFM Company $5,508 for services performed. Oct-31 623 Wages Expense 980 101 To Cash A/c 980 The company paid $980 cash for Lyn Addie’s wages for seven days' work. Oct-31 319 Dividends Dr 2,900 101 To Cash A/c 2,900 The company paid $2,900 cash in dividends. Nov-01 676 Mileage Expense Dr 320 101 To Cash A/c 320 The company reimbursed S. Rey in cash for business automobile mileage allowance (Rey logged 1,000 miles at $0.32 per mile) Nov-02 101 Cash A/c Dr 4,733 403 To Computer Services Revenue A/c 4,733 The company received $4,733 cash from Liu Corporation for computer services performed. Nov-05 167 Computer Equipment A/c Dr 1,040 101 To Cash A/c 1,040 The company purchased computer supplies for $1,040 cash from Harris Office Products. Nov-08 106 Accounts Receivable Dr 5,768 403 To Computer Services Revenue A/c 5,768 The company billed Gomez Co. $5,768 for services performed. Nov-13 Income not accrued - No Entry Nov-18 101 Cash A/c Dr 5,508 106 To Accounts Receivable 5,508 The company received $1,708 cash from IFM Company as partial payment of the October 28 bill. Nov-22 677 Miscellaneous Expenses 230 101 To Cash A/c 230 The company donated $230 cash to the United Way in the company's name. Nov-24 106 Accounts Receivable Dr 4,950 403 To Computer Services Revenue A/c 4,950 The company completed work and sent a bill for $4,950. to Alex’s Engineering Co. Nov-25 106 Accounts Receivable Dr 3,800 403 To Computer Services Revenue A/c 3,800 The company sent another bill to IFM Company for the past-due amount of $3,800. Nov-28 676 Mileage Expense Dr 384 101 To Cash A/c 384 The company reimbursed S. Rey in cash for business automobile mileage (1,200 miles at $0.32 per mile). Nov-30 623 Wages Expense 1,960 101 To Cash A/c 1,960 The company paid $1,960 cash for Lyn Addie's wages for 14 days' work. Nov-30 319 Dividends Dr 2,000 101 To Cash A/c 2,000 The company paid $2,000 cash in dividends.
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