After the success of the companys first two months Santana R

After the success of the company’s first two months, Santana Rey continues to operate Business Solutions. The November 30, 2017, unadjusted trial balance of Business Solutions (reflecting its transactions for October and November of 2017) follows.

Business Solutions had the following transactions and events in December 2017.   

The following additional facts are collected for use in making adjusting entries prior to preparing financial statements for the company’s first three months:

The December 31 inventory count of computer supplies shows $640 still available.

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

As of December 31, Lyn Addie has not been paid for four days of work at $125 per day.

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

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

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.
2-a. Prepare adjusting entries to reflect a through f.
2-b. Post the journal entries to record each of the December transactions, adjusting entries to the accounts in the ledger.
3. Prepare an adjusted trial balance as of December 31, 2017.
4. Prepare an income statement for the three months ended December 31, 2017.
5. Prepare a statement of owner’s equity for the three months ended December 31, 2017.
6. Prepare a balance sheet as of December 31, 2017.

No.	Account Title	Debit	Credit
101	Cash	$	38,764
106	Accounts receivable		13,518
126	Computer supplies		2,645
128	Prepaid insurance		2,100
131	Prepaid rent		3,260
163	Office equipment		8,700
164	Accumulated depreciation—Office equipment				$	0
167	Computer equipment		22,800
168	Accumulated depreciation—Computer equipment					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		6,500
403	Computer services revenue					31,149
612	Depreciation expense—Office equipment		0
613	Depreciation expense—Computer equipment		0
623	Wages expense		2,575
637	Insurance expense		0
640	Rent expense		0
652	Computer supplies expense		0
655	Advertising expense		1,718
676	Mileage expense		634
677	Miscellaneous expenses		200
684	Repairs expense—Computer		735
	Totals	$	104,149		$	104,149

Req 1 Req 2A Req 2B Req 3 Req 4 Req 5 Req 6 Prepare an income statement for the three months ended December 31, 2017. BUSINESS SOLUTIONS Income Statement For Three Months Ended December 31, 2017 Revenue Expenses Total expenses

Solution

1) Date General Journal Debit Credit Dec 2 Advertising expense $965.00 Cash $965.00 Dec 3 Repairs expense-computer $490.00 Cash $490.00 Dec 4 Cash $4,250.00 Accounts receivable $4,250.00 Dec 10 Wages expense (6 days x $125) $750.00 Cash $750.00 Dec 14 Cash $1,600.00 Unearned computer services revenue $1,600.00 Dec 15 Computer supplies $1,400.00 Accounts Payable $1,400.00 Dec 16 No journal entry Dec 20 Cash $6,275.00 Computer services revenue $6,275.00 Dec 28 Cash $3,900.00 Accounts receivables $3,900.00 Dec 29 Mileage expense (600 miles at $0.30 per mile) $180.00 Cash $180.00 Dec 31 S. Rey, Withdrawals $1,200.00 Cash $1,200.00