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In: Accounting

Serial Problem Business Solutions LO P1, P2, P3, P4, P5, P6 After the success of the...

Serial Problem Business Solutions LO P1, P2, P3, P4, P5, P6

After the success of the company’s first two months, Santana Rey continues to operate Business Solutions. The November 30, 2019, unadjusted trial balance of Business Solutions (reflecting its transactions for October and November of 2019) follows.

No.

Account Title

Debit

Credit

101

Cash

$

38,564

106

Accounts receivable

12,818

126

Computer supplies

2,645

128

Prepaid insurance

1,860

131

Prepaid rent

3,200

163

Office equipment

8,700

164

Accumulated depreciation—Office equipment

$

0

167

Computer equipment

22,400

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

6,500

403

Computer services revenue

34,064

612

Depreciation expense—Office equipment

0

613

Depreciation expense—Computer equipment

0

623

Wages expense

2,150

637

Insurance expense

0

640

Rent expense

0

652

Computer supplies expense

0

655

Advertising expense

1,688

676

Mileage expense

644

677

Miscellaneous expenses

170

684

Repairs expense—Computer

725

Totals

$

102,064

$

102,064

Business Solutions had the following transactions and events in December 2019.   

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 $4,850 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 $110 per day.

14

Notified by Alex’s Engineering Co. that Business Solutions’ bid of $7,700 on a proposed project has been accepted. Alex’s paid a $2,000 cash advance to Business Solutions.

15

Purchased $1,300 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 $6,525 cash.

22–26

Took the week off for the holidays.

28

Received $3,200 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 $1,200 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.

  1. The December 31 inventory count of computer supplies shows $630 still available.

  2. Three months have expired since the 12-month insurance premium was paid in advance.

  3. As of December 31, Lyn Addie has not been paid for four days of work at $110 per day.

  4. The computer system, acquired on October 1, is expected to have a four-year life with no salvage value.

  5. The office equipment, acquired on October 1, is expected to have a five-year life with no salvage value.

  6. Three of the four months' prepaid rent have expired.

Required:

3. Prepare an adjusted trial balance as of December 31, 2019. 4. Prepare an income statement for the three months ended December 31, 2019. 5. Prepare a statement of retained earnings for the three months ended December 31, 2019. 6. Prepare a balance sheet as of December 31, 2019. 7. Record the necessary closing entries as of December 31, 2019 and then post the closing entries to the general ledger in Requirement 2B. 8. Prepare a post-closing trial balance as of December 31, 2019.

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