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Financial & Managerial Accounting
Found in: Page 92
Financial & Managerial Accounting

Financial & Managerial Accounting

Book edition 7th
Author(s) John J Wild, Ken W. Shaw, Barbara Chiappetta
Pages 1096 pages
ISBN 9781259726705

Short Answer

Question: (This serial problem started in Chapter 1 and continues through most of the chapters. If the Chapter 1 segment was not completed, the problem can begin at this point.)

SP 2 On October 1, 2017, 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, 2017. The company’s initial chart of accounts follows.

Account No. Account No.

Cash ………………...................... 101 Common Stock ……………...... 307

Accounts Receivable ………….. 106 Dividends ………………………. 319

Computer Supplies …………….. 126 Computer Services Revenue ..403

Prepaid Insurance ……………….128 Wages Expense ………………. 623

Prepaid Rent ………………………131 Advertising Expense ………….655

Office Equipment ……………….. 163 Mileage Expense ……………… 676

Computer Equipment ……………167 Miscellaneous Expenses ……. 677

Accounts Payable ………………..201 Repairs Expense—Computer ..684

Required

3. Prepare a trial balance as of the end of November.

Answer

The total of trial balance matches at $98,659

See the step by step solution

Step by Step Solution

Step 1: No.of accounts

In the given case, there are 16 accounts in the general ledger out of the 13 accounts are having debit balances and the rest 3 of them are having a credit balance. These accounts have been listed in the trial balance in step 2.

Step 2: Trial Balance

Business Solutions

Trial Balance

April 30

Debit

Credit

Cash

$ 38,264

Accounts Receivables

12,618

Computer Supplies

2,545

Prepaid Insurance

2,220

Prepaid Rent

3,300

Office Equipment

8,000

Computer Equipment

20,000

Accounts Payable

0

Common Stock

73,000

Dividends

5,600

Computer Service Revenues

25,659

Wages Expenses

2,625

Advertising Expenses

1,728

Mileage Expenses

704

Miscellaneous Expenses

250

Repair expenses - Computer

805

Total

$ 98,659

$ 98,659

Most popular questions for Business-studies Textbooks

Yi Min started an engineering firm called Min Engineering. He began operations and completed seven transactions in May, which included his initial investment of $18,000 cash. After those seven transactions, the ledger included the following accounts with normal balances.

Cash ……………………………………….. $37,600

Office supplies ………………………………... 890

Prepaid insurance …………………………...4,600

Office equipment ………………………….. 12,900

Accounts payable …………………………..12,900

Common stock …………………………….. 18,000

Dividends …………………………………….. 3,370

Engineering fees earned …………………. 36,000

Rent expense ………………………………… 7,540

Required

2. The following seven transactions produced the account balances shown above.

a. Y. Min invested $18,000 cash in the business in exchange for common stock.

b. Paid $7,540 cash for monthly rent expense for May.

c. Paid $4,600 cash in advance for the annual insurance premium beginning the next period.

d. Purchased office supplies for $890 cash.

e. Purchased $12,900 of office equipment on credit (with accounts payable).

f. Received $36,000 cash for engineering services provided in May.

g. The company paid $3,370 cash in dividends.

Prepare a Cash T-account, enter the cash effects (if any) of each transaction, and compute the ending Cash balance (code each entry in the T-account with one of the transaction codes a through g).

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