After the success of the company's first two month, Santana Rey continues to operate Business Solutions. The November 30, 2011, unadjusted trial balance of Business Solutions. ( reflecting its transactions for October and November of 2011) follows.
No. Account Title Debit Credit
101 Cash $38,264
106 Account receivable 12,618
126 Computer supplies 2,545
128 Prepaid insurance 2,220
131 Prepaid Rent 3,300
163 Office equipment 8,000
164 Accumulated depreciation
- office equipment 0
167 Computer equipment 20,000
168 Accumulated depreciation 0
201 Accounts payable 0
210 Wages payable 0
236 Unearned computer services revenue 0
301 S. Rey, Capital 73,000
302 S. Rey, Withdrawals 5,600
403 Computer services revenue 25,659
612 Depreciation expense
-office equipment 0
613 Depreciation expense
-Computer equipment 0
623 Wages expense 2,625
637 Insurance expense 0
640 Rent expense 0
652 Computer supplies expense 0
655 Advertising expense 1,728
676 Mileage expense 704
677 Miscellaneous expense 250
684 Repairs expense- Computer 805
Totals $98,659 $98,659
Business Solutions had the following transactions and events in December 2011.
Dec.2 Paid $1,025 cash to Hillside Mall for Business Solutions' share of mall advertising costs.
3 Paid $500 cash for minor repairs to the company's computer
4 Received $3,950 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 $125 per day.
14 Notified by Alex's Engineering Co. that Business Solutions' bid of $7,000 on proposed project has been accepted. Alex's paid a $1,500 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 $5,625 cash.
22-26 Took the week off for the holidays
28 Received $3,000 cash from Gomez Co. on its receivable.
29 Reimbursed S. Rey for business automobile mileage (600 miles at $0.32 per mile)
31 S. Rey withdrew $1,500 cash from the company for personal use.
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 show $580 still available
b. Three months have expired since the 12-month insurance premium was paid in advance.
c. As a December 31, Lyn Addie has not been paid for four days of work at $125 per day.
d. The company's computer is expected to have a four-year life with no salvage value.
e. The office equipment is expected to have a five-year life with no salvage value.
f. Three of the four months' prepaid rent has expired.
Required
1. Prepare journal entries to record each of the December transactions and events for Business Solutions. Post those entries to the accounts in the ledger.
2. Prepaid adjusting entries to reflect a through f. Post those entries to the accounts in the ledger.
3. Prepare an adjusted trial balance as of December 31, 2011.
4. Prepare an income statement for the three months ended December 31, 2011
5. Prepare a statement of owner's equity for the three months ended December 31, 2011
6. Prepare a balance sheet as of December 31, 2011.