After the success of the company\'s first two months, Adria Lopez continues to o
ID: 2542522 • Letter: A
Question
After the success of the company's first two months, Adria Lopez continues to operate Success s success Systems had the following transactions and events in December 2016. Dec.2 Paid $1,025 cash to Hilside Mall for success Systems' share of mall 3 Paid $500 cash for minor repairs to the company's computer $3,950 cash from Alex's Engineering Co. for the receivable from November 10 Paid cash to Lyn Addle for six days of work at the rate or $125 per day 14 Notified by Alex's Engineering S Co that Success Systems bid of$7,000on a proposed project has been accepted. Alexspaid a $1,500 cash advance to Success Systems 15 Purchased $1,100of computer supplies on credit fromHarris 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 $5.625 cash 22-26 Took the week off for the holidays 28 Received $3,000 cash from Gomez Co on its receivable 29 Reimbursed A Lopez for business automobile mileage (600 miles at $0.32 per mile) 31 The business 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 a. The December 31 inventory count of computer supplies shows S580 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 $125 per day View as TexExplanation / Answer
Answer 1. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 2-Dec Advertising Expenses 1,025.00 Cash 1,025.00 (record the advertising exp.) 3-Dec Repair Expense - Computer 500.00 Cash 500.00 (record the repair exp. - Computer) 4-Dec Cash 3,950.00 Accounts Receivable 3,950.00 (record the cash recevied) 10-Dec Wages Expense 750.00 Cash 750.00 (record the wage expense) 14-Dec Cash 1,500.00 Unearned Computer Service Revenue 1,500.00 (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 5,625.00 Computer Service Revenue 5,625.00 (Record the revenue earnes) 22-Dec No Entry 28-Dec Cash 3,000.00 Accounts Receivable 3,000.00 (record the cash recd) 29-Dec Mileage Expense 192.00 Cash 192.00 (record the mileage expense) 31-Dec Dividends 1,500.00 Cash 1,500.00 (record the cash withdrawl) Answer 2.1. Adjusting Journal Entry Date Particulars Dr. Amt. Cr. Amt a. Computer Supplies Expense 3,065.00 $3,645 - $580 Computer Supplies 3,065.00 $3,645 - $580 (record the supplies expense) b. Insurance Expense 555.00 $2,220 X 3/12 Prepaid Insurance 555.00 $2,220 X 3/12 (record the insurance Expense for 3 months) c. Wages Expense 500.00 $125 X 4 Wages Payable 500.00 $125 X 4 (record the wages expense) d. Depreciation Expense - Computer Equip. 1,250.00 $20,000 / 4 Years X (3/12) Accum. Dep. - Comp. Equip 1,250.00 $20,000 / 4 Years X (3/12) (record the dep. Expense) e. Depreciation Expense - Office Equip. 400.00 $8,000 / 5 Years X (3/12) Accum. Dep. - Office Equip 400.00 $8,000 / 5 Years X (3/12) (record the dep. Expense) f. Rent Expense 2,475.00 $3,300 X 3/4 Prepaid Insurance 2,475.00 $3,300 X 3/4 (record the rent expense) Answer 2.2. Cash Accounts Receivable Computer Supplies Beg. Bal. 48,052.00 1,025.00 2-Dec Beg. Bal. 12,618.00 3,950.00 4-Dec Beg. Bal. 2,545.00 3,065.00 a. 4-Dec 3,950.00 500.00 3-Dec 3,000.00 28-Dec 15-Dec 1,100.00 14-Dec 1,500.00 750.00 10-Dec 20-Dec 5,625.00 192.00 29-Dec 28-Dec 3,000.00 1,500.00 31-Dec End. Bal. 58,160.00 End. Bal. 5,668.00 End. Bal. 580.00 Prepaid Insurance Prepaid Rent Computer Equipment Beg. Bal. 2,220.00 555.00 b. Beg. Bal. 3,300.00 2,475.00 f. Beg. Bal. 20,000.00 End. Bal. 1,665.00 End. Bal. 825.00 End. Bal. 20,000.00 Accumulated Dep.- Equipment Office Equipment Accumulated Dep.- Computer Equipment Beg. Bal. - Beg. Bal. 8,000.00 Beg. Bal. - 400.00 e. 1,250.00 d. End. Bal. 400.00 End. Bal. 8,000.00 End. Bal. 1,250.00 Accounts Payable Wages Payable Unearned Computer Service Revenue Beg. Bal. - Beg. Bal. - Beg. Bal. - 1,100.00 15-Dec 500.00 c. 1,500.00 14-Dec End. Bal. 1,100.00 End. Bal. 500.00 End. Bal. 1,500.00 Common Stock Dividends Computer Service Revenue Beg. Bal. 83,000.00 Beg. Bal. 5,600.00 Beg. Bal. 25,659.00 31-Dec 1,500.00 5,625.00 20-Dec End. Bal. 83,000.00 End. Bal. 7,100.00 End. Bal. 31,284.00 Dep. Exp. - Office Equipment Dep. Exp. - Computer Equipment Wages Expense Beg. Bal. - Beg. Bal. - Beg. Bal. 2,625.00 e. 400.00 d. 1,250.00 10-Dec 750.00 c. 500.00 End. Bal. 400.00 End. Bal. 1,250.00 End. Bal. 3,875.00 Insurance Expense Rent Expense Computer Supplies Expense Beg. Bal. - Beg. Bal. - Beg. Bal. - b. 555.00 f. 2,475.00 a. 3,065.00 End. Bal. 555.00 End. Bal. 2,475.00 End. Bal. 3,065.00 Advertising Expense Mileage Expense Misc. Expense Beg. Bal. 1,940.00 Beg. Bal. 704.00 Beg. Bal. 250.00 2-Dec 1,025.00 29-Dec 192.00 End. Bal. 2,965.00 End. Bal. 896.00 End. Bal. 250.00 Repair Expense - Computer Beg. Bal. 805.00 3-Dec 500.00 End. Bal. 1,305.00 Answer 3. Success System Adjusted Trial Balance Dec 31, 2016 Accounts Title Debits Credits Cash 58,160.00 Accounts Receivable 5,668.00 Computer Supplies 580.00 Prepaid Insurance 1,665.00 Prepaid Rent 825.00 Computer Equipment 20,000.00 Accumulated Dep.- Equipment 400.00 Office Equipment 8,000.00 Accumulated Dep.- Computer Equipment 1,250.00 Accounts Payable 1,100.00 Wages Payable 500.00 Unearned Computer Service Revenue 1,500.00 Common Stock 83,000.00 Dividends 7,100.00 Computer Service Revenue 31,284.00 Dep. Exp. - Office Equipment 400.00 Dep. Exp. - Computer Equipment 1,250.00 Wages Expense 3,875.00 Insurance Expense 555.00 Rent Expense 2,475.00 Computer Supplies Expense 3,065.00 Advertising Expense 2,965.00 Mileage Expense 896.00 Misc. Expense 250.00 Repair Expense - Computer 1,305.00 Total 119,034.00 119,034.00 - Answer 4. Success System Income Statement For Three Months Ended Dec 31, 2016 Revenues: Computer Service Revenue 31,284.00 Expenses Dep. Exp. - Office Equipment 400.00 Dep. Exp. - Computer Equipment 1,250.00 Wages Expense 3,875.00 Insurance Expense 555.00 Rent Expense 2,475.00 Computer Supplies Expense 3,065.00 Advertising Expense 2,965.00 Mileage Expense 896.00 Misc. Expense 250.00 Repair Expense - Computer 1,305.00 Total Expenses 17,036.00 Net Income (Loss) 14,248.00 Answer 5. Success System Statement of Retained Earnings For Three Months Ended Dec 31, 2016 Beginning Balance - Net Income (Loss) 14,248.00 Dividends (7,100.00) Retained Earnings - June 30, 2018 7,148.00 Answer 6. Success System Balance Sheet Dec 31, 2017 Assets Current Assets Cash 58,160.00 Accounts Receivable 5,668.00 Computer Supplies 580.00 Prepaid Insurance 1,665.00 Prepaid Rent 825.00 Total Current Assets 66,898.00 Property, Plant & Equipment Computer Equipment 20,000.00 Accumulated Dep.- Equipment (400.00) 19,600.00 Office Equipment 8,000.00 Accumulated Dep.- Computer Equipment (1,250.00) 6,750.00 Total Property, Plant & Equipment 26,350.00 Total Assets 93,248.00 Liabilities & Stockholders' Equity Liabilities Current Liabilities Accounts Payable 1,100.00 Wages Payable 500.00 Unearned Computer Service Revenue 1,500.00 Total Current Liabilities 3,100.00 Long-Term Liabilities - Total Liabilities 3,100.00 Stockholders' Equity Common Stock 83,000.00 Retained Earnings 7,148.00 Total Stockholders' Equity 90,148.00 Total Liabilities & Stockholders' Equity 93,248.00 Answer 8. - Success System Closing Trial Balance Dec 31, 2016 Accounts Title Debits Credits Cash 58,160.00 Accounts Receivable 5,668.00 Computer Supplies 580.00 Prepaid Insurance 1,665.00 Prepaid Rent 825.00 Computer Equipment 20,000.00 Accumulated Dep.- Equipment 400.00 Office Equipment 8,000.00 Accumulated Dep.- Computer Equipment 1,250.00 Accounts Payable 1,100.00 Wages Payable 500.00 Unearned Computer Service Revenue 1,500.00 Common Stock 83,000.00 Retained Earnings 7,148.00 Total 94,898.00 94,898.00 Answer 7. Closing Journal Entry Date Particulars Dr. Amt. Cr. Amt. 1 Income Summary 17,036.00 Dep. Exp. - Office Equipment 400.00 Dep. Exp. - Computer Equipment 1,250.00 Wages Expense 3,875.00 Insurance Expense 555.00 Rent Expense 2,475.00 Computer Supplies Expense 3,065.00 Advertising Expense 2,965.00 Mileage Expense 896.00 Misc. Expense 250.00 Repair Expense - Computer 1,305.00 (To record the closing entry for expenses) 2 Computer Service Revenue 31,284.00 Income Summary 31,284.00 (To record the closing entry for revenues) 3 Income Summary 14,248.00 Retained Earnings 14,248.00 (To record the net income transferred) 4 Dividends 7,100.00 Retained Earnings 7,100.00 (To record the net income transferred)