Boondiddy9
06.08.2021 •
Business
On October 1, 2020, Adrian Lopez launched a computer services company, Success Systems, which is organized as a corporation and provides consulting services, computer system installations, and custom program development. Lopez adopts the calendar year for reporting purposes and expects to prepare the company's first set of financial statements on December 31, 2020. A list of business transactions for the months of October to December:
Oct. 1 The owner invested $55,000 cash, a $20,000 computer system, and $8,000 of office equipment in the company in exchange for its common stock.
2 The company paid $3,300 cash for four months’ rent. (Hint: Debit Prepaid Rent for $3,300.)
3 The company purchased $1,420 of computer supplies on credit from Harris Office Products.
5 The company paid $2,220 cash for one year’s premium on a property and liability insurance policy. (Hint: Debit Prepaid Insurance for $2,220.)
6 The company billed Easy Leasing $24,000 for services performed in installing a new Web server.
8 The company paid $1,420 cash for the computer supplies purchased from Harris Office Products on Oct 3
10 The company hired Lyn Addie as a part-time assistant for $125 per day, as needed.
15 The company received $24,000 cash from Easy Leasing as payment on its account.
17 The company paid $805 cash to repair computer equipment that was damaged when moving it.
20 The company paid $1,940 cash for advertisements published in the local newspaper.
31 The company paid $875 cash for Lyn Addie's wages for seven days' work.
31 The company paid $3,600 cash in dividends.
Nov 2 The company received $ 5,140 cash from Liu Corporation for computer services performed.
5 The company purchased computer supplies for $1,125 cash from Harris Office Products.
31 The company paid $2,000 cash in dividends.
Dec.2 Paid $1,025 cash to Hillside Mall for Success Systems’ share of mall advertising costs.
3 Paid $500 cash for minor repairs to the company’s computer.
10 Paid cash to Lyn Addie for six days of work at the rate of $125 per day.
15 Purchased $1,100 of computer supplies on credit from Harris Office Products.
20 Completed a project for Liu Corporation and received $6,000cash.
21 Received $11,582 Cash advance from a customer for computer service that will be performed next month22-26 Took the week off for the holidays.31 The company paid $1,582 cash for dividends.
Requirements
Step 1: Journalize each of the business recordable transactions for the months of October to December in the General Journal.You may omit explanations of the transactions. Skip a line between each set of journal entries. (Hint: Enter ‘No Entry required’ for non-recordable business transactions)
Step 2: Post from General Journal to General Ledger/T-AccountNo.
Step 3: Prepare the Unadjusted Trial Balance
Step 4: The following additional facts are collected for use in making adjusting entries on December 31 prior to preparing financial statements for the company’s first three months. Journalize the following adjustingjournal entries in theGeneral Journal on page 6 and then post them to the General Ledger Accounts.
•The December 31 inventory count of computer supplies shows $580 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.
•Total Depreciation expense for the computer equipment, acquired on October 1, is$1,250
•Total Depreciation expense for the office equipment, acquired on October 1, is $400
•Three of the four months’ prepaid rent has expired.
Step 5: Prepare the Adjusted Trial Balance.
Step6: Prepare the 3 Financial Statements on December 31
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