On August 1, 2014, Brant O’Brien launched a computer services company called Business Solutions, which provides consulting services, computer system installations, custom programming and web development. Brant planned on preparing financial statements quarterly but can’t wait and wants to see how his company is doing after only 2 months.
The company’s initial chart of accounts follows.
Cash 101 Common Stock 301
Accounts Receivable 106 Dividends 302
Computer Supplies 126 Computer Services Revenue 403
Prepaid Insurance 128 Wages Expense 623
Office Equipment 163 Advertising Expense 655
Computer Equipment 167 Mileage Expense 676
Accounts Payable 201 Rent Expense 677
Unearned Revenue 210 Repairs Expense – Computer 684
1. Prepare journal entries to record each of the following transactions for Business Solutions.
1 Brant O’Brien invested $45,000 cash, a $20,000 computer system, and $8,000 of office equipment in the company and received common stock.
2 The company paid $1,300 cash for August rent.
3 The company purchased $1,420 of computer supplies on credit from Staples.
5 The company paid $2,220 cash for one year’s premium on a property and liability insurance policy.
6 The company billed Easy Leasing $4,800 for services performed in installing a new Web Server.
8 The company paid $1,420 cash for the computer supplies purchased from Staples on October 3.
10 The company hired Deb Long as a part-time assistant for $125 per day, as needed.
12 The company billed Easy Leasing another $1,400 for services performed.
15 The company received $4,800 cash from Easy Leasing as partial payment on its account.
17 The company paid $805 cash to repair computer equipment that was damaged when moving it.
20 The company paid $1,728 cash for advertisements published in the local newspaper.
22 The company received $1,400 cash from Easy Leasing on its account.
24 Received $1,500 down payment from Enterprise Rent-A-Car for a web design project that will begin in January 2015.
28 The company billed IFM Company $5,208 for services performed.
31 The company paid $875 cash for Deb Long’s wages for seven days’ work.
31 Brant O’Brien paid himself a $500 cash dividend.
1 The company reimbursed Brant O’Brien in cash for business automobile mileage allowance (1,000 miles at $0.32 per mile).
2 The company received $4,633 cash from Liu Corporation for computer services performed.
5 The company purchased computer supplies for $1,125 cash from Staples.
8 The company billed Gomez Co. $5,668 for services performed.
13 The company received notification from Alex’s Engineering Co. that Business Solutions’ bid of $3,950 for an upcoming project is accepted.
18 The company received $2,208 cash from IFM Company as partial payment of the August 28 bill.
24 The company completed work for Alex’s Engineering Co. and sent a bill for $3,950.
25 The company sent another bill to IFM Company for the past-due amount of $3,000.
28 The company reimbursed Brant O’Brien in cash for business automobile mileage (1,200 miles at $0.32 per mile).
30 The company paid $1,750 cash for Deb Long’s wages for 14 days’ work.
30 Brant O’Brien paid himself a $700 cash dividend.
2. Open ledger accounts (T-Accounts) and post the journal entries from part 1 to them. (I have set up cash and accounts receivable for you, copy, paste and rename what you need).
3. Prepare a Trial Balance for Business Solutions as of end of September.
4. Prepare an Income Statement for Business Solutions as of September 30, 2014.
5. Prepare a Statement of Owners Equity for Business Solutions as of September 30, 2014.
6. Prepare a Balance Sheet for Business Solutions as of September 30, 2014.
|Due By (Pacific Time)||02/15/2015 12:00 am|
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