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After the success of the company’s first two months, Santana Rey continues to operate Business Solutions....

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.

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.

Solutions

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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

Working Journal Entries for understanding:

Date Account Debit Credit
Dec 2 Advertising Expense 995
Dec 2 Cash 995
Dec 3 Repairs Expense-Computer 460
Dec 3 Cash 460
Dec 4 Cash 4050
Dec 4 Accounts Receivable 4050
Dec 10 Wages Expense 690 115*6
Dec 10 Cash 690
Dec 14 Cash 2500
Dec 14 Unearned computer services revenue 2500
Dec 15 Computer Supplies 1100
Dec 15 Accounts Payable 1100
Dec 20 Cash 5775
Dec 20 Computer Services Revenue 5775
Dec 28 Cash 3500
Dec 28 Accounts Receivable 3500
Dec 28 Mileage Expense 160 500*0.32
Dec 28 Cash 160
Dec 31 Dividends 1300
Dec 31 Cash 1300
Adjusting Entries:
Date Account Debit Credit
Dec 31 Computer supplies expense 3105 2645+1100-640
Dec 31 Computer supplies 3105
Dec 31 Insurance Expense 495 1980/12*3
Dec 31 Prepaid Insurance 495
Dec 31 Wages Expense 460 115*4
Dec 31 Wages Payable 460
Dec 31 Depreciation Expense-Computer Equipment 1325 (21200/4)/12*3
Dec 31 Accumulated Depreciation-Computer Equipment 1325
Dec 31 Depreciation Expense-Office Equipment 420 (8400/5)/12*3
Dec 31 Accumulated Depreciation-Office Equipment 420
Dec 31 Rent Expense 2220 2960/4*3
Dec 31 Prepaid Rent 2220

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