On October 1, 2011, Aurora Wilson organized a computer service company called Aurora Systems. Aurora is organized as a sole proprietorship and will provide consulting services, computer system installations, and custom program development. Wilson has adopted the calendar year for reporting, and expects to prepare the company's first set of financial statements as of December 31, 2011. The initial chart of accounts for the accounting system includes these items:
|
|
|
|
| Account Number |
Account Name |
Account Number |
Account Name |
| 101 |
Cash |
301 |
Aurora Wilson, Capital |
| 106 |
Accounts Receivable |
302 |
Aurora Wilson, Withdrawals |
| 126 |
Computer Supplies |
403 |
Computer Services Revenue |
| 128 |
Prepaid Insurance |
623 |
Wages Expense |
| 131 |
Prepaid Rent |
655 |
Advertising Expense |
| 163 |
Office Equipment |
676 |
Mileage Expense |
| 167 |
Computer Equipment |
684 |
Repairs Expense, Computer |
| 201 |
Accounts Payable |
699 |
Charitable Donations Expense |
Part A
Required
1. Set up balance column accounts based on the chart of accounts provided.
2. Prepare journal entries to record each of the following October transactions.
3. Post the October entries.
4. Prepare a trial balance at October 31, 2011.
5. Prepare an income statement and a statement of changes in equity for the month ended October 31, 2011, as well as a balance sheet at October 31, 2011.
Oct. 1 Aurora Wilson invested $26,500 cash, a $9,000 computer system, and $5,000 of office equipment in the business.
2 Paid six months of rent in advance; $8,250.
3 Purchased computer supplies on credit for $1,475 from Triple-One Supplies.
5 Paid $8,136 cash for one year's premium on a property and liability insurance policy.
6 Billed Norton Electric $1,300 for installing a new computer system.
8 Paid for the computer supplies purchased from Triple-One Supplies.
10 Hired Donald Gee as a part-time assistant for $325 per day, as needed.
12 Billed Norton Electric another $975 for computer services rendered.
15 Received $1,000 from Norton Electric on its account.
17 Paid $875 to repair equipment damaged when moving into the new office.
20 Paid $2,075 for an advertisement in the local newspaper.
22 Received the balance owing from Norton Electric on its account.
28 Billed Whistler Resort $7,346 for services.
31 Paid Donald Gee for nine days' work.
31 Aurora Wilson withdrew $1,500 cash from the business for personal use.
Part B
Required
6. Prepare journal entries to record each of the following November transactions.
7. Post the November entries.
8. Prepare a trial balance at November 30, 2011.
9. Prepare an income statement and a statement of changes in equity for the two months ended
November 30, 2011, as well as a balance sheet at Novembe 30, 2011.
Nov. 1 Reimbursed Aurora Wilson's business automobile expense for 1,950 kilometres at $1.75 per kilometre.
2 Received $8,240 cash from Langara Lodge for computer services rendered.
5 Purchased $450 of computer supplies for cash from Triple-One Supplies.
8 Billed Dinwoody Entertainment $3,230 for computer services rendered.
13 Notified by Kinsetta Groceries that Aurora's bid of $4,950 for an upcoming project was accepted.
18 Received $4,000 from Whistler Resort against the bill dated October 28.
22 Donated $400 to the Hope Mission in the company's name.
24 Completed work for Kinsetta Groceries and sent a bill for the agreed amount.
25 Sent another bill to Whistler Resort for the past due amount of $3,346.
28 Reimbursed Aurora Wilson's business automobile expense for 870 kilometres at $1.75 per kilometre.
30 Paid Donald Gee for 17 days' work.
30 Aurora Wilson withdrew $1,800 cash from the business for personal use.