On October 1, 2011, Santana Rey launched a computer services company called Business Solutions, which provides consulting services, computer system installations, and custom program development. Rey a

On October 1, 2011, 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, 2011. The company’s initial chart of accounts follows.

Oct. 1 S. Rey invested $50,000 cash, a $28,000 computer system, and $9,000 of office equipment in the company in exchange for its common stock.

2 The company paid $3,280 cash for four months’ rent. (Hint: Debit Prepaid Rent for $3,280.)

3 The company purchased $1,340 of computer supplies on credit from Harris Office Products.

5 The company paid $2,100 cash for one year’s premium on a property and liability insurance policy. (Hint: Debit Prepaid Insurance for $2,100.)

6 The company billed Easy Leasing $5,000 for services performed in installing a new Web server.

8 The company paid $1,340 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 $1,900 for services performed.

15 The company received $5,000 cash from Easy Leasing as partial payment on its account.

17 The company paid $775 cash to repair computer equipment that was damaged when moving it.

20 The company paid $1,708 cash for advertisements published in the local newspaper.

22 The company received $1,900 cash from Easy Leasing on its account.

28 The company billed IFM Company $6,108 for services performed.

31 The company paid $875 cash for Lyn Addie’s wages for seven days’ work.

31 The company paid $3,400 cash for dividends.

Nov. 1 The company reimbursed S. Rey in cash for business automobile mileage allowance (Rey logged 1,000 miles at $0.25 per mile).

2 The company received $4,833 cash from Liu Corporation for computer services performed.

5 The company purchased computer supplies for $1,060 cash from Harris Office Products.

8 The company billed Gomez Co. $5,768 for services performed.

13 The company received notification from Alex’s Engineering Co. that Business Solutions’ bid of $4,150 for an upcoming project is accepted.

18 The company received $3,208 cash from IFM Company as partial payment of the October 28 bill.

22 The company donated $210 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 $4,150.

25 The company sent another bill to IFM Company for the past-due amount of $2,900.

28 The company reimbursed S. Rey in cash for business automobile mileage (1,200 miles at $0.25 per mile).

30 The company paid $1,750 cash for Lyn Addie’s wages for 14 days’ work.

30 The company paid $1,100 cash for dividends.

Required:

1.

Prepare journal entries to record each of the above transactions for Business Solutions. (In cases where no entry is required, please select the option “No journal entry required” for your answer to grade correctly. Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)

Date General Journal Debit Credit

Oct. 1

2

3

5

6

8

10

12

15

17

20

22

28

31

31

Nov. 1

2

5

8

13

18

22

24

25

28

30

30

2.

Prepare a ledger accounts (in balance column format) and post the journal entries from required 1 to them. (Input all amounts as positive values. Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)

General Ledger accounts

Cash

Date Debit Credit Balance

Oct. 1

2

5

8

15

17

20

22

31

31

Nov. 1

2

5

18

22

28

30

30

Accounts Receivable

Date Debit Credit Balance

Oct. 6

12

15

22

28

Nov. 8

18

24

Computer Supplies

Date Debit Credit Balance

Oct. 3

Nov. 5

Prepaid Insurance

Date Debit Credit Balance

Oct. 5

Prepaid Rent

Date Debit Credit Balance

Oct. 2

Office Equipment

Date Debit Credit Balance

Oct. 1

Computer Equipment

Date Debit Credit Balance

Oct. 1

Accounts Payable

Date Debit Credit Balance

Oct. 3

8

Common stock

Date Debit Credit Balance

Oct. 1

Dividends

Date Debit Credit Balance

Oct. 31

Nov. 30

Computer Services Revenue

Date Debit Credit Balance

Oct. 6

12

28

Nov. 2

8

24

Wages Expense

Date Debit Credit Balance

Oct. 31

Nov. 30

Advertising Expense

Date Debit Credit Balance

Oct. 20

Mileage Expense

Date Debit Credit Balance

Nov. 1

28

Miscellaneous Expenses

Date Debit Credit Balance

Nov. 22

Repairs Expense – Computer

Date Debit Credit Balance

Oct. 17

3.

Prepare a trial balance as of the end of November. (Be sure to list assets in the order of their liquidity.The items in the Trial Balance should be grouped as follows: Assets, Liabilities, Equity, Revenues, and Expenses. Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)

BUSINESS SOLUTIONS

Trial Balance

November 30

Debit Credit

$

$

Totals $ $

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