After the success of the company's first two months, Santana Rey continues to operate Business Solutions. The November 30, 2015, unadjusted trial balance of Business Solutions (reflecting its transactions for October and November of 2015) follows.
| No. |
Account Title |
Debit |
Credit |
| 101 |
Cash |
$ |
38,864 |
|
|
|
| 106 |
Accounts receivable |
|
13,018 |
|
|
|
| 126 |
Computer supplies |
|
2,645 |
|
|
|
| 128 |
Prepaid insurance |
|
2,100 |
|
|
|
| 131 |
Prepaid rent |
|
3,220 |
|
|
|
| 163 |
Office equipment |
|
8,700 |
|
|
|
| 164 |
Accumulated depreciation-Office equipment |
|
|
|
$ |
0 |
| 167 |
Computer equipment |
|
20,800 |
|
|
|
| 168 |
Accumulated depreciation-Computer equipment |
|
|
|
|
0 |
| 201 |
Accounts payable |
|
|
|
|
0 |
| 210 |
Wages payable |
|
|
|
|
0 |
| 236 |
Unearned computer services revenue |
|
|
|
|
0 |
| 301 |
S. Rey, Capital |
|
|
|
|
72,000 |
| 302 |
S. Rey, Withdrawals |
|
6,000 |
|
|
|
| 403 |
Computer services revenue |
|
|
|
|
28,774 |
| 612 |
Depreciation expense-Office equipment |
|
0 |
|
|
|
| 613 |
Depreciation expense-Computer equipment |
|
0 |
|
|
|
| 623 |
Wages expense |
|
2,200 |
|
|
|
| 637 |
Insurance expense |
|
0 |
|
|
|
| 640 |
Rent expense |
|
0 |
|
|
|
| 652 |
Computer supplies expense |
|
0 |
|
|
|
| 655 |
Advertising expense |
|
1,648 |
|
|
|
| 676 |
Mileage expense |
|
614 |
|
|
|
| 677 |
Miscellaneous expenses |
|
170 |
|
|
|
| 684 |
Repairs expense-Computer |
|
795 |
|
|
|
|
|
|
|
|
|
|
|
Totals |
$ |
100,774 |
|
$ |
100,774 |
|
|
|
|
|
|
|
|
Business Solutions had the following transactions and events in December 2015.
Dec. 2 Paid $950 cash to Hillside Mall for Business Solutions' share of mall advertising costs.
3 Paid $480 cash for minor repairs to the company's computer.
4 Received $4,050 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 $120 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 $1,800 cash advance to Business Solutions.
15 Purchased $1,500 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 $6,275 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 (400 miles at $0.23 per mile).
31 S. Rey withdrew $1,200 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 shows $590 still available.
b. Three months have expired since the 12-month insurance premium was paid in advance.
c. As of December 31, Lyn Addie has not been paid for four days of work at $120 per day.
d. The computer system, acquired on October 1, is expected to have a four-year life with no salvage value.
e. The office equipment, acquired on October 1, is expected to have a five-year life with no salvage value.
f. Three of the four months' prepaid rent has expired.