Reference no: EM132674497

Question - 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 $38,764

106 Accounts receivable 13,418

126 Computer supplies 2,645

128 Prepaid insurance 1,980

131 Prepaid rent 3,220

163 Office equipment 8,400

164 Accumulated depreciation-Office equipment $0

167 Computer equipment 23,200

168 Accumulated depreciation-Computer equipment 0

201 Accounts payable 0

210 Wages payable 0

236 Unearned computer services revenue 0

307 Common stock 71,000

318 Retained earnings 0

319 Dividends 6,400

403 Computer services revenue 32,739

612 Depreciation expense-Office equipment 0

613 Depreciation expense-Computer equipment 0

623 Wages expense 2,425

637 Insurance expense 0

640 Rent expense 0

652 Computer supplies expense 0

655 Advertising expense 1,628

676 Mileage expense 684

677 Miscellaneous expenses 240

684 Repairs expense-Computer 735

Totals $103,739 $103,739

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

Dec. 2 Paid $925 cash to Hillside Mall for Business Solutions' share of mall advertising costs.

Dec. 3 Paid $470 cash for minor repairs to the company's computer.

Dec. 4 Received $4,750 cash from Alex's Engineering Co. for the receivable from November.

Dec. 10 Paid cash to Lyn Addie for six days of work at the rate of $115 per day.

Dec. 14 Notified by Alex's Engineering Co. that Business Solutions' bid of $7,900 on a proposed project has been accepted. Alex's paid a $2,100 cash advance to Business Solutions.

Dec. 15 Purchased $1,800 of computer supplies on credit from Harris Office Products.

Dec. 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 $6,625 cash. 22-26 Took the week off for the holidays.

Dec. 28 Received $3,800 cash from Gomez Co. on its receivable.

Dec. 29 Reimbursed S. Rey for business automobile mileage (400 miles at $0.29 per mile).

Dec. 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 $580 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 $115 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 -

1. Prepare journal entries to record each of the December transactions and events for Business Solutions.

2-a. Prepare adjusting entries to reflect a through f.

2-b. Post the journal entries to record each of the December transactions from Requirement 1 and adjusting entries from Requirement 2A. After completing Requirement 7, post the closing entries to the general ledger accounts.

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.