Ass 2+

Serial Problem Business Solutions LO A1, P1, P2

On October 1, 2015, Santana Rey launched a computer services company called Business Solutions, which provides consulting services, computer system installations, and custom program development. Rey adopts the calendar year for reporting purposes and expects to prepare the company’s first set of financial statements on December 31, 2015. The company’s initial chart of accounts follows.

Account	No.		Account	No.
Cash	101		Common Stock	307
Accounts Receivable	106		Dividends	319
Computer Supplies	126		Computer Services Revenue	403
Prepaid Insurance	128		Wages Expense	623
Prepaid Rent	131		Advertising Expense	655
Office Equipment	163		Mileage Expense	676
Computer Equipment	167		Miscellaneous Expenses	677
Accounts Payable	201		Repairs Expense—Computer	684

Oct.	1	S. Rey invested $45,000 cash, a $20,000 computer system, and $8,000 of office equipment in the company in exchange for its common stock.
	2	The company paid $3,300 cash for four months’ rent. (Hint: Debit Prepaid Rent for $3,300.)
	3	The company purchased $1,420 of computer supplies on credit from Harris Office Products.
	5	The company paid $2,220 cash for one year’s premium on a property and liability insurance policy. (Hint: Debit Prepaid Insurance for $2,220.)
	6	The company billed Easy Leasing $4,800 for services performed in installing a new Web server.
	8	The company paid $1,420 cash for the computer supplies purchased from Harris Office Products on October 3.
	10	The company hired Lyn Addie as a part-time assistant for $125 per day, as needed.
	12	The company billed Easy Leasing another $1,400 for services performed.
	15	The company received $4,800 cash from Easy Leasing as partial payment on its account.
	17	The company paid $805 cash to repair computer equipment that was damaged when moving it.
	20	The company paid $1,728 cash for advertisements published in the local newspaper.
	22	The company received $1,400 cash from Easy Leasing on its account.
	28	The company billed IFM Company $5,208 for services performed.
	31	The company paid $875 cash for Lyn Addie's wages for seven days' work.
	31	The company paid $3,600 cash in dividends.
Nov.	1	The company reimbursed S. Rey in cash for business automobile mileage allowance (Rey logged 1,000 miles at $0.32 per mile).
	2	The company received $4,633 cash from Liu Corporation for computer services performed.
	5	The company purchased computer supplies for $1,125 cash from Harris Office Products.
	8	The company billed Gomez Co. $5,668 for services performed.
	13	The company received notification from Alex's Engineering Co. that Business Solutions' bid of $3,950 for an upcoming project is accepted.
	18	The company received $2,208 cash from IFM Company as partial payment of the October 28 bill.
	22	The company donated $250 cash to the United Way in the company's name.
	24	The company completed work for Alex's Engineering Co. and sent it a bill for $3,950.
	25	The company sent another bill to IFM Company for the past-due amount of $3,000.
	28	The company reimbursed S. Rey in cash for business automobile mileage (1,200 miles at $0.32 per mile).
	30	The company paid $1,750 cash for Lyn Addie's wages for 14 days' work.
	30	The company paid $2,000 cash in dividends.

Required:
1.	Prepare journal entries to record each of the above transactions for Business Solutions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Date	General Journal	Debit	Credit
Oct 01	Cash	45,000
	Office equipment	8,000
	Computer equipment	20,000
	Common stock		73,000
Oct 02	Prepaid rent	3,300
	Cash		3,300
Oct 03	Computer supplies	1,420
	Accounts payable		1,420
Oct 05	Prepaid insurance	2,220
	Cash		2,220
Oct 06	Accounts receivable	4,800
	Computer services revenue		4,800
Oct 08	Accounts payable	1,420
	Cash		1,420
Oct 10	No journal entry required
Oct 12	Accounts receivable	1,400
	Computer services revenue		1,400
Oct 15	Cash	4,800
	Accounts receivable		4,800
Oct 17	Repairs expense—Computer	805
	Cash		805
Oct 20	Advertising expense	1,728
	Cash		1,728
Oct 22	Cash	1,400
	Accounts receivable		1,400
Oct 28	Accounts receivable	5,208
	Computer services revenue		5,208
Oct 31	Wages expense	875
	Cash		875
Oct 31	Dividends	3,600
	Cash		3,600
Nov 01	Mileage expense	320
	Cash		320
Nov 02	Cash	4,633
	Computer services revenue		4,633
Nov 05	Computer supplies	1,125
	Cash		1,125
Nov 08	Accounts receivable	5,668
	Computer services revenue		5,668
Nov 13	No journal entry required
Nov 18	Cash	2,208
	Accounts receivable		2,208
Nov 22	Miscellaneous expenses	250
	Cash		250
Nov 24	Accounts receivable	3,950
	Computer services revenue		3,950
Nov 25	No journal entry required
Nov 28	Mileage expense	384
	Cash		384
Nov 30	Wages expense	1,750
	Cash		1,750
Nov 30	Dividends	2,000
	Cash		2,000

2.	Prepare ledger accounts (in balance column format) and post the journal entries from requirement 1 to them.

	101: Cash Date Debit Credit Balance Oct. 1 45,000 45,000 Oct. 2 3,300 41,700 Oct. 5 2,220 39,480 Oct. 8 1,420 38,060 Oct. 15 4,800 42,860 Oct. 17 805 42,055 Oct. 20 1,728 40,327 Oct. 22 1,400 41,727 Oct. 31 875 40,852 Oct. 31 3,600 37,252 Nov. 1 320 36,932 Nov. 2 4,633 41,565 Nov. 5 1,125 40,440 Nov. 18 2,208 42,648 Nov. 22 250 42,398 Nov. 28 384 42,014 Nov. 30 1,750 40,264 Nov. 30 2,000 38,264

	106: Accounts Receivable Date Debit Credit Balance Oct. 6 4,800 4,800 Oct. 12 1,400 6,200 Oct. 15 4,800 1,400 Oct. 22 1,400 0 Oct. 28 5,208 5,208 Nov. 8 5,668 10,876 Nov. 18 2,208 8,668 Nov. 24 3,950 12,618

	126: Computer Supplies Date Debit Credit Balance Oct. 3 1,420 1,420 Nov. 5 1,125 2,545

	128: Prepaid Insurance Date Debit Credit Balance Oct. 5 2,220 2,220

	131: Prepaid Rent Date Debit Credit Balance Oct. 2 3,300 3,300

	163: Office Equipment Date Debit Credit Balance Oct. 1 8,000 8,000

	167: Computer Equipment Date Debit Credit Balance Oct. 1 20,000 20,000

	201: Accounts Payable Date Debit Credit Balance Oct. 3 1,420 1,420 Oct. 8 1,420 0

	307: Common Stock Date Debit Credit Balance Oct. 1 73,000 73,000

	319: Dividends Date Debit Credit Balance Oct. 31 3,600 3,600 Nov. 30 2,000 5,600

	403: Computer Services Revenue Date Debit Credit Balance Oct. 6 4,800 4,800 Oct. 12 1,400 6,200 Oct. 28 5,208 11,408 Nov. 2 4,633 16,041 Nov. 8 5,668 21,709 Nov. 24 3,950 25,659

	623: Wages Expense Date Debit Credit Balance Oct. 31 875 875 Nov. 30 1,750 2,625

	655: Advertising Expense Date Debit Credit Balance Oct. 20 1,728 1,728

	676: Mileage Expense Date Debit Credit Balance Nov. 1 320 320 Nov. 28 384 704

	677: Miscellaneous Expenses Date Debit Credit Balance Nov. 22 250 250

	684: Repairs Expense—Computer Date Debit Credit Balance Oct. 17 805 805

3.	Prepare a trial balance as of the end of November.

BUSINESS SOLUTIONS Trial Balance November 30 Cash $38,264 Accounts receivable 12,618 Computer supplies 2,545 Prepaid insurance 2,220 Prepaid rent 3,300 Office equipment 8,000 Computer equipment 20,000 Accounts payable Common stock 73,000 Dividends 5,600 Computer services revenue 25,659 Wages expense 2,625 Advertising expense 1,728 Mileage expense 704 Miscellaneous expense 250 Repairs expense—Computer 805 Totals $98,659 $98,659