Print 3 Item 1 After the success of the company’s first two months, Santana Rey continues to operate Business Solutions. The November 30, 2021, unadjusted trial balance of Business Solutions (reflecting its transactions for October and November of 2021) follows. Number Account Title Debit Credit 101 Cash $ 38,264 106 Accounts receivable 12,618 126 Computer supplies 2,545 128 Prepaid insurance 2,220 131 Prepaid rent 3,300 163 Office equipment 8,000 164 Accumulated depreciation—Office equipment $ 0 167 Computer equipment 20,000 168 Accumulated depreciation—Computer equipment 0 201 Accounts payable 0 210 Wages payable 0 236 Unearned computer services revenue 0 307 Common stock 73,000 318 Retained earnings 0 319 Dividends 5,600 403 Computer services revenue 25,659 612 Depreciation expense—Office equipment 0 613 Depreciation expense—Computer equipment 0 623 Wages expense 2,625 637 Insurance expense 0 640 Rent expense 0 652 Computer supplies expense 0 655 Advertising expense 1,728 676 Mileage expense 704 677 Miscellaneous expenses 250 684 Repairs expense—Computer 805 901 Income summary 0 Totals $ 98,659 $ 98,659 Business Solutions had the following transactions and events in December 2021. December 2 Paid $1,025 cash to Hillside Mall for Business Solutions's share of mall advertising costs. December 3 Paid $500 cash for minor repairs to the company’s computer. December 4 Received $3,950 cash from Alex’s Engineering Company for the receivable from November. December 10 Paid cash to Lyn Addie for six days of work at the rate of $125 per day. December 14 Notified by Alex’s Engineering Company that Business Solutions's bid of $7,000 on a proposed project has been accepted. Alex’s paid a $1,500 cash advance to Business Solutions. December 15 Purchased $1,100 of computer supplies on credit from Harris Office Products. December 16 Sent a reminder to Gomez Company to pay the fee for services recorded on November 8. December 20 Completed a project for Liu Corporation and received $5,625 cash. December 22-26 Took the week off for the holidays. December 28 Received $3,000 cash from Gomez Company on its receivable. December 29 Reimbursed S. Rey for business automobile mileage (600 miles at $0.32 per mile). December 31 Paid $1,500 cash for dividends. The following additional facts are collected for use in making adjusting entries prior to preparing financial statements for the company’s first three months. The December 31 inventory count of computer supplies shows $580 still available. Three months have expired since the 12-month insurance premium was paid in advance. As of December 31, Lyn Addie has not been paid for four days of work at $125 per day. The computer system, acquired on October 1, is expected to have a four-year life with no salvage value. The office equipment, acquired on October 1, is expected to have a five-year life with no salvage value. Three of the four months' prepaid rent have expired. Required: 1. Prepare journal entries to record each of the December transactions. Post those entries to the accounts in the ledger. 2-a. Prepare adjusting entries to reflect a through f. 2-b. Post the journal entries to record each of the December transactions, adjusting entries to the accounts in the ledger. 3. Prepare an adjusted trial balance as of December 31, 2021. 4. Prepare an income statement for the three months ended December 31, 2021. 5. Prepare a statement of retained earnings for the three months ended December 31, 2021. 6. Prepare a classified balance sheet as of December 31, 2021. 7. Record the necessary closing entries as of December 31, 2021. 8. Prepare a post-closing trial balance as of December 31, 2021.

Question

Print

3

Item 1

After the success of the company’s first two months, Santana Rey continues to operate Business Solutions. The November 30, 2021, unadjusted trial balance of Business Solutions (reflecting its transactions for October and November of 2021) follows.

Number	Account Title	Debit	Credit
101	Cash	$ 38,264
106	Accounts receivable	12,618
126	Computer supplies	2,545
128	Prepaid insurance	2,220
131	Prepaid rent	3,300
163	Office equipment	8,000
164	Accumulated depreciation—Office equipment		$ 0
167	Computer equipment	20,000
168	Accumulated depreciation—Computer equipment		0
201	Accounts payable		0
210	Wages payable		0
236	Unearned computer services revenue		0
307	Common stock		73,000
318	Retained earnings		0
319	Dividends	5,600
403	Computer services revenue		25,659
612	Depreciation expense—Office equipment	0
613	Depreciation expense—Computer equipment	0
623	Wages expense	2,625
637	Insurance expense	0
640	Rent expense	0
652	Computer supplies expense	0
655	Advertising expense	1,728
676	Mileage expense	704
677	Miscellaneous expenses	250
684	Repairs expense—Computer	805
901	Income summary		0
	Totals	$ 98,659	$ 98,659

Business Solutions had the following transactions and events in December 2021.

December 2	Paid $1,025 cash to Hillside Mall for Business Solutions's share of mall advertising costs.
December 3	Paid $500 cash for minor repairs to the company’s computer.
December 4	Received $3,950 cash from Alex’s Engineering Company for the receivable from November.
December 10	Paid cash to Lyn Addie for six days of work at the rate of $125 per day.
December 14	Notified by Alex’s Engineering Company that Business Solutions's bid of $7,000 on a proposed project has been accepted. Alex’s paid a $1,500 cash advance to Business Solutions.
December 15	Purchased $1,100 of computer supplies on credit from Harris Office Products.
December 16	Sent a reminder to Gomez Company to pay the fee for services recorded on November 8.
December 20	Completed a project for Liu Corporation and received $5,625 cash.
December 22-26	Took the week off for the holidays.
December 28	Received $3,000 cash from Gomez Company on its receivable.
December 29	Reimbursed S. Rey for business automobile mileage (600 miles at $0.32 per mile).
December 31	Paid $1,500 cash for dividends.

The following additional facts are collected for use in making adjusting entries prior to preparing financial statements for the company’s first three months.

The December 31 inventory count of computer supplies shows $580 still available.
Three months have expired since the 12-month insurance premium was paid in advance.
As of December 31, Lyn Addie has not been paid for four days of work at $125 per day.
The computer system, acquired on October 1, is expected to have a four-year life with no salvage value.
The office equipment, acquired on October 1, is expected to have a five-year life with no salvage value.
Three of the four months' prepaid rent have expired.

Required:

1. Prepare journal entries to record each of the December transactions. Post those entries to the accounts in the ledger.

2-a. Prepare adjusting entries to reflect a through f.

2-b. Post the journal entries to record each of the December transactions, adjusting entries to the accounts in the ledger.

3. Prepare an adjusted trial balance as of December 31, 2021.

4. Prepare an income statement for the three months ended December 31, 2021.

5. Prepare a statement of retained earnings for the three months ended December 31, 2021.

6. Prepare a classified balance sheet as of December 31, 2021.

7. Record the necessary closing entries as of December 31, 2021.

8. Prepare a post-closing trial balance as of December 31, 2021.

Answer 1

Expert Solution

Answer 2

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution

See solution Check out a sample Q&A here

Step 1: Adjusted Trial Balance Explained as follows -

VIEW

Step 2: Journal Entries are recorded for all the Transactions -

VIEW

Step 3: Adjusting Entries are recorded -

VIEW

Step 4: T-Accounts prepared using journal and adjusting entries -

VIEW

Solution

VIEW

Answer 3

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution

See solution Check out a sample Q&A here

Answer 4

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution

Answer 5

This question has been solved!

Answer 6

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

Answer 7

This is a popular solution

Answer 8

This is a popular solution

Answer 9

See solution Check out a sample Q&A here

Answer 10

Trending nowThis is a popular solution!

Step by stepSolved in 5 steps

See solution

Check out a sample Q&A here

Answer 11

Trending nowThis is a popular solution!

Step by stepSolved in 5 steps

See solution

Check out a sample Q&A here

Answer 12

Trending nowThis is a popular solution!

Step by stepSolved in 5 steps

Answer 13

Trending nowThis is a popular solution!

Answer 14

Trending nowThis is a popular solution!

Answer 15

Trending now

Answer 16

This is a popular solution!

Answer 17

Step by stepSolved in 5 steps

Answer 18

Step by stepSolved in 5 steps

Answer 19

Step by step

Answer 20

Solved in 5 steps

Answer 21

See solution

Check out a sample Q&A here

Related questions

Concept explainers

Item 1

Required: