In: Accounting
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. |
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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 | |||