After the success of the company’s first two months, Santana Rey continues to op
ID: 2400299 • Letter: A
Question
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. No. Account Title Debit Credit 101 Cash $ 39,164 106 Accounts receivable 12,918 126 Computer supplies 2,645 128 Prepaid insurance 1,980 131 Prepaid rent 2,960 163 Office equipment 8,400 164 Accumulated depreciation—Office equipment $ 0 167 Computer equipment 21,200 168 Accumulated depreciation—Computer equipment 0 201 Accounts payable 0 210 Wages payable 0 236 Unearned computer services revenue 0 307 Common stock 68,000 318 Retained earnings 0 319 Dividends 6,400 403 Computer services revenue 33,474 612 Depreciation expense—Office equipment 0 613 Depreciation expense—Computer equipment 0 623 Wages expense 2,500 637 Insurance expense 0 640 Rent expense 0 652 Computer supplies expense 0 655 Advertising expense 1,698 676 Mileage expense 694 677 Miscellaneous expenses 200 684 Repairs expense—Computer 715 Totals $ 101,474 $ 101,474 Business Solutions had the following transactions and events in December 2015. Dec. 2 Paid $995 cash to Hillside Mall for Business Solutions’ share of mall advertising costs. 3 Paid $460 cash for minor repairs to the company’s computer. 4 Received $4,050 cash from Alex’s Engineering Co. for the receivable from November. 10 Paid cash to Lyn Addie for six days of work at the rate of $115 per day. 14 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. 15 Purchased $1,100 of computer supplies on credit from Harris Office Products. 16 Sent a reminder to Gomez Co. to pay the fee for services recorded on November 8. 20 Completed a project for Liu Corporation and received $5,775 cash. 22–26 Took the week off for the holidays. 28 Received $3,500 cash from Gomez Co. on its receivable. 29 Reimbursed S. Rey for business automobile mileage (500 miles at $0.32 per mile). 31 The company paid $1,300 cash in 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: a. The December 31 inventory count of computer supplies shows $640 still available. b. Three months have expired since the 12-month insurance premium was paid in advance. c. As of December 31, Lyn Addie has not been paid for four days of work at $115 per day. d. The computer system, acquired on October 1, is expected to have a four-year life with no salvage value. e. The office equipment, acquired on October 1, is expected to have a five-year life with no salvage value. f. Three of the four months' prepaid rent has expired. Prepare an adjusted 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.
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:
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
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Working Journal Entries for understanding:
As on 30th Nov December Unadjusted as on 31st Dec Adjustment Adjusted No. Account Title Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit 101 Cash 39,164 12220 51,384 0 51,384 0 106 Accounts Receivable 12,918 -7550 5,368 0 5,368 0 126 Computer Supplies 2,645 1100 3,745 0 3105 3,745 3105 128 Prepaid insurance 1,980 1,980 0 495 1,980 495 131 Prepaid rent 2,960 2,960 0 2220 2,960 2220 163 Office equipment 8,400 8,400 0 420 8,400 420 164 Accumulated depreciation—Office equipment 0 0 0 1325 0 1325 167 Computer equipment 21,200 21,200 0 21,200 0 168 Accumulated depreciation—Computer equipment 0 0 0 0 0 201 Accounts Payable 0 1100 0 1100 0 1100 210 Wages payable 0 0 0 460 0 460 236 Unearned computer services revenue 0 2500 0 2500 0 2500 307 Common stock 68,000 0 68000 0 68000 318 Retained earnings 0 0 0 0 0 319 Dividends 6,400 1300 7,700 0 7,700 0 403 Computer Services Revenue 33,474 5775 0 39249 0 39249 612 Depreciation expense—Office equipment 0 0 0 420 420 0 613 Depreciation expense—Computer equipment 0 0 0 1325 1,325 0 623 Wages Expense 2,500 690 3,190 0 460 3,650 0 637 Insurance expense 0 0 0 495 495 0 640 Rent expense 0 0 0 2220 2,220 0 652 Computer supplies expense 0 0 0 3105 3,105 0 655 Advertising Expense 1,698 995 2,693 0 2,693 0 676 Mileage Expense 694 160 854 0 854 0 677 Miscellaneous expenses 200 200 0 200 0 684 Repairs Expense-Computer 715 460 1,175 0 1,175 0 Totals 101,474 101,474 9,375 9,375 110,849 110,849 8,025 8,025 118,874 118,874