Chapter 2 & 3: Serial Problems

On October 1, 2018, 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, 2018. The company's initial chart of accounts follows. Prepare General Ledger Accounts

101: Cash October 1 - D - $53,000 2 - C - $3,280 5 - C - $1,980 8 - C - $1410 15 - D - $5100 17 - C - $755 20 - C - $1703 22 - D - $1800 31 - C - $770 31 - C - $3300 November 1 - C- $280 2 - D - $5533 5 - C - $1100 18 - D - 2108 22 - C - $200 28 - C - $336 30 - C- $1540 30 - C - $1300 106: Accounts Receivable October 6 - D - $5100 12 - D - $1800 15 - C- $5100 22 - C - $1800 28 - D - $6008 November 8 - D - $6068 18 - C - $2108 24 - D - $3950 126: Computer Supplies October 3 - D - $1410 November 5 - D - $1100 128: Prepaid Insurance October 5 - D - $1980 131: Prepaid Rent October 2 - D - $3280 163: Office Equipment October 1 - D - $9000 167: Computer Equipment October 1 - D - $27000 201: Accounts Payable October 3 - C - $1410 8 - D - $1410 307: Common Stock October 1 - C - $89000 319: Dividends October 31 - D- $3300 November 30 - D - $1300 403: Computer Services Revenue October 6 - C - $5100 12 - C - $1800 28 - C - $6008 November 2 - C - $5533 8 - C - $6068 24 - C - $3950 623: Wages Expense October 31 - D - $770 November 30 - D - $1540 655: Advertising Expense October 20 - D - $1703 676: Mileage Expense November 1 - D - $280 28 - D - $336 677: Miscellaneous Expenses November 22 - D - $200 684: Repairs Expense - Computer October 17 - D - $755

On October 1, 2018, 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, 2018. The company's initial chart of accounts follows. Prepare Trial Balance

Business Solutions Trial Balance November 30 D - Cash - $49,587 D - Accts. Rec. - $13,918 D - Com. Supplies - $2,510 D - Prepaid Ins. - $1980 D - Prepaid Rent - $3,280 D - Office Equip. - $9000 D - Computer Equip. - $27,000 C - Common Stock - $89000 D - Dividends - $4600 C - Computer Services Rev. - $28459 D - Wages Exp. - $2310 D - Advertising Exp. - $1703 D - Mileage Exp. - $616 D - Misc. Exp. - $200 D - Repairs Exp. Com. - $755 Totals $117,459

Wells Technical Institute (WTI), a school owned by Tristana Wells, provides training to individuals who pay tuition directly to the school. WTI also offers training to groups in off-site locations. Its unadjusted trial balance as of December 31, 2018, follows. WTI initially records prepaid expenses and unearned revenues in balance sheet accounts. Descriptions of items a through h that require adjusting entries on December 31, 2018, follow. Prepare the T-Accounts from the Trial Balance and Adjusting Entries

Cash Unadjusted Balance - D - $26793 Adjusted Balance - D - $26793 Accounts Receivable Unadjusted Balance - D - $0 f - Debit - $9600 Adjusted Balance - D - $9600 Teaching Supplies Unajusted Balance - D- $10304 b - Credit - $7642 Adjusted Balance - D - $2662 Prepaid Insurance Unadjusted Balance - D - $15458 a - Credit - $3071 Adjusted Balance - D - $12,387 Prepaid Rent Unadjusted Balance - D - $2062 h - Credit - $2062 Adjusted Balance - D - $0 Professional Library Unadjusted Balance - D - $30913 Adjusted Balance - D - $30913 Accumulated Depreciation - Professional Libary Unadjusted Balance - C - $9275 d - Credit - $6142 Adjusted Balance - C - $15,417 Tuitiion Fees Earned Unadjusted Balance - C - $105108 f - Credit - $9600 Adjusted Balance - C - $114,708 Training Fees Earned Unadjusted Balance - C - $39,158 e - Credit - $4400 Adjusted Balance - C- $43558 Depreciation Expense - Professional Library Unadjusted Balance - D - $0 d - Debit - $6142 Adjusted Balance - D - $6142 Depreciation Expense - Equipment Unadjusted Balance - D - $0 c - Debit - $12,285 Adjusted Balance - D - $12,285 Salaries Expense Unadjusted Balance - D - $49464 g - Debit - $400 Adjusted Balance - D - $49,864 Insurance Expense Unadjusted Balance - D - $0 a - Debit - $3071 Adjusted Balance - $3071 Equipment Unadjusted Balance - D - $72,119 Adjusted Balance - D - $72119 Accumulated Depreciation - Equipment Unadjusted Balance - C - $16,489 c - Credit - $12,285 Adjusted Balance - C - $28,774 Accounts Payable Unadjusted Balance - C - $37431 Adjusted Balance - C - $37431 Salaries Payable Unadjusted Balance - C- $0 g - Credit - $400 Adjusted Balance - C - $400 Unearned Training Fees Unadjusted Balance - C - $11,000 e - Debit - $4400 Adjusted Balance - C - $6600 Common Stock Unadjusted Balance - C - $11000 Adjusted Balance - C - $11000 Retained Earnings Unadjusted Balance -C - $54539 Adjusted Balance - C- $54,539 Dividends Unadjusted Balance - D- $41,220 Adjusted Balance - D - $41,220 Rent Expense Unadjusted Balance - D - $22,682 h - Debit - $2062 Adjusted Balance - D - $24,744 Teaching Supplies Expense Unadjusted Balance - D - $0 b - Debit - $7642 Adjusted Balance - D - $7642 Advertising Expense Unadjusted Balance - D - $7214 Adjusted Balance - D - $7214 Utilities Expense Unadjusted Balance - D - $5771 Adjusted Balance - D - $5771

Wells Technical Institute (WTI), a school owned by Tristana Wells, provides training to individuals who pay tuition directly to the school. WTI also offers training to groups in off-site locations. Its unadjusted trial balance as of December 31, 2018, follows. WTI initially records prepaid expenses and unearned revenues in balance sheet accounts. Descriptions of items a through h that require adjusting entries on December 31, 2018, follow. a) An analysis of WTI's insurance policies shows that $3,071 of coverage has expired. b) An inventory count shows that teaching supplies costing $2,662 are available at year-end 2018. c) Annual depreciation on the equipment is $12,285. d) Annual depreciation on the professional library is $6,142. e) On November 1, WTI agreed to do a special six-month course (starting immediately) for a client. The contract calls for a monthly fee of $2,200, and the client paid the first five months' fees in advance. When the cash was received, the Unearned Training Fees account was credited. The fee for the sixth month will be recorded when it is collected in 2019. f) On October 15, WTI agreed to teach a four-month class (beginning immediately) for an individual for $3,840 tuition per month payable at the end of the class. The class started on October 15, but no payment has yet been received. (WTI's accruals are applied to the nearest half-month; for example, October recognizes one-half month accrual.) g) WTI's two employees are paid weekly. As of the end of the year, two days' salaries have accrued at the rate of $100 per day for each employee. h) The balance in the Prepaid Rent account represents rent for December.

General Journal a) D - Ins. Exp. - $3071 C - Prepaid Ins. - $3071 b) D - Teaching Sup. Exp. - $7642 C - Teaching Supplies - $7642 c) D - Dep. Exp. Equip. - $12285 C - Acc. Dep. Equip. - $12285 d) D - Dep. Exp. Pro. Lib. - $6142 C - Acc. Dep. Pro. Lib. - $6142 e) D - Unearned Training Fees - $4400 C - Training Fees Earned - $4400 f) D - Accts. Rec. - $9600 C - Tuition Fees Earned - $9600 g) D - Salaries Exp. - $400 C - Salaries Pay. - $400 h) D - Rent Exp. - $2062 C - Prepaid Rent - $2062

On October 1, 2018, 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, 2018. The company's initial chart of accounts follows. Oct. 1 - S. Rey invested $53,000 cash, a $27,000 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 $1,410 of computer supplies on credit from Harris Office Products. 5 - The company paid $1,980 cash for one year's premium on a property and liability insurance policy. (Hint: Debit Prepaid Insurance for $1,980.) 6 - The company billed Easy Leasing $5,100 for services performed in installing a new web server. 8 - The company paid $1,410 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 $110 per day, as needed. 12 - The company billed Easy Leasing another $1,800 for services performed. 15 - The company received $5,100 cash from Easy Leasing as partial payment on its account. 17 - The company paid $755 cash to repair computer equipment that was damaged when moving it. 20 - The company paid $1,703 cash for advertisements published in the local newspaper. 22 - The company received $1,800 cash from Easy Leasing on its account. 28 - The company billed IFM Company $6,008 for services performed. 31 - The company paid $770 cash for Lyn Addie's wages for seven days' work. 31 - The company paid $3,300 cash in dividends. Nov. 1 - The company reimbursed S. Rey in cash for business automobile mileage allowance (Rey logged 1,000 miles at $0.28 per mile). 2 - The company received $5,533 cash from Liu Corporation for computer services performed. 5 - The company purchased computer supplies for $1,100 cash from Harris Office Products. 8 - The company billed Gomez Co. $6,068 for services performed. 13 - The company received notification from Alex's Engineering Co. that Business Solutions's bid of $3,950 for an upcoming project was accepted. 18 - The company received $2,108 cash from IFM Company as partial payment of the October 28 bill. 22 - The company donated $200 cash to the United Way in the company's name. 24 - The company completed work and sent a bill for $3,950 to Alex's Engineering Co. 25 - The company sent another bill to IFM Company for the past-due amount of $3,900. 28 - The company reimbursed S. Rey in cash for business automobile mileage (1,200 miles at $0.28 per mile). 30 - The company paid $1,540 cash for Lyn Addie's wages for 14 days' work. 30 - The company paid $1,300 cash in dividends.

Prepare General Journal October 1 D - Cash - $53,000 D - Computer Equip. - $27,000 D - Office Equip. - $9,000 C - Common Stock - $89,000 October 2 D - Prepaid Rent - $3,280 C - Cash - $3,280 October 3 D - Computer Supplies - $1410 C - Accounts Payable - $1410 October 5 D - Prepaid Insurance - $1980 C - Cash - $1980 October 6 D - Accounts Rec. - $5100 C - Computer Services Rev. - $5100 October 8 D - Accounts Pay. - $1410 C - Cash - $1410 October 10 No Journal Entry Required October 12 D - Accounts Rec. - $1800 C - Computer Services Rev. - $1800 October 15 D - Cash - $5100 C - Accounts Rec. - $5100 October 17 D - Repairs Exp. Com - $755 C - Cash - $755 October 20 D - Advertising Exp. - $1703 C - Cash - $1703 October 22 D - Cash - $1800 C - Accounts Rec. - $1800 October 28 D - Accounts Rec. - $6008 C - Computer Services Rev. - $6008 October 31 D - Wages Exp. - $770 C - Cash - $770 October 31 D - Dividends - $3300 C - Cash - $3300 November 1 D - Mileage Exp. - $280 C - Cash - $280 November 2 D - Cash - $5533 C - Computer Services Rev. - $5533 November 5 D - Computer Supplies - $1100 C - Cash - $1100 November 8 D - Accounts Rec. - $6068 C - Computer Services Rev. - $6068 November 13 No Journal Entry Required November 18 D - Cash - $2108 C - Accounts Rec. - $2108 November 22 D - Misc. Exp. - $200 C - Cash - $200 November 24 D - Accounts Rec. - $3950 C - Computer Services Rev. - $3950 November 25 No Journal Entry Required November 28 D - Mileage Exp. - $336 C - Cash - $336 November 30 D - Wages Exp. - $1540 C - Cash - $1540 November 30 D - Dividends - $1300 C - Cash - $1300

Wells Technical Institute (WTI), a school owned by Tristana Wells, provides training to individuals who pay tuition directly to the school. WTI also offers training to groups in off-site locations. Its unadjusted trial balance as of December 31, 2018, follows. WTI initially records prepaid expenses and unearned revenues in balance sheet accounts. Descriptions of items a through h that require adjusting entries on December 31, 2018, follow. Prepare Balance Sheet

Well Technical Institue Balance Sheet December 31, 2018 Assets Cash $26793 Accts. Rec. $9600 Teaching Supplies $2662 Prepaid Ins. $12387 Professional Lib. $30913 Acc. Dep. - Pro. Lib $15417 Equipment $72119 Acc. Dep. - Equip. $28774 Total Assets $110,283 Liabilities Accounts Pay. $37431 Salaries Pay. $400 Unearned Training Fees $6600 Total Liabilities $44,431 Equity Common Stock $11,000 Total Equity $11,000 Total Liabilities and Equity $55,431

Wells Technical Institute (WTI), a school owned by Tristana Wells, provides training to individuals who pay tuition directly to the school. WTI also offers training to groups in off-site locations. Its unadjusted trial balance as of December 31, 2018, follows. WTI initially records prepaid expenses and unearned revenues in balance sheet accounts. Descriptions of items a through h that require adjusting entries on December 31, 2018, follow. Prepare Adjust Trial Balance

Wells Technical Institute Adjust Trial Balance December 31, 2018 D - Cash - $26793 D - Accts. Rec. - $9600 D - Teaching Supp. - $2662 D - Prepaid Ins. - $12,387 D - Prepaid Rent - $0 D - Pro. Library - $30,913 C - Acc. Dep. Pro. Lib. - $15,417 D - Equipment - $72119 C - Acc. Dep. Equip. - $28774 C - Accts. Pay. - $37431 C - Salaries Payable - $400 C - Unearned Training Fees - $6600 C - Common Stock - $11,000 C - Retained Earnings - $54,539 D - Dividends - $41220 C - Tutition Fees Earned - $114708 C - Training Fees Earned - $43558 D - Dep. Exp. Pro. Lib. - $6142 D - Dep. Exp. Equip. - $12,285 D - Salaries Exp. - $49,864 D - Insurance Exp. - $3071 D - Rent Exp. - $24,744 D - Teaching Supplies Exp. - $7642 D - Advertising Exp. - $7214 D - Utilties Exp. - $5771 Totals $312,427

Wells Technical Institute (WTI), a school owned by Tristana Wells, provides training to individuals who pay tuition directly to the school. WTI also offers training to groups in off-site locations. Its unadjusted trial balance as of December 31, 2018, follows. WTI initially records prepaid expenses and unearned revenues in balance sheet accounts. Descriptions of items a through h that require adjusting entries on December 31, 2018, follow. Prepare Statement of Retained Earnings

Wells Technical Institute Statement of Retained Earnings For Year Ended December 31, 2018 Retained earnings, December 31, 2017 $54,539 Add: Net Income $41,533 Less: Dividends $41,220 Retained earnings, December 31, 2018 $54,852

Wells Technical Institute (WTI), a school owned by Tristana Wells, provides training to individuals who pay tuition directly to the school. WTI also offers training to groups in off-site locations. Its unadjusted trial balance as of December 31, 2018, follows. WTI initially records prepaid expenses and unearned revenues in balance sheet accounts. Descriptions of items a through h that require adjusting entries on December 31, 2018, follow. Prepare Income Statement

Wells Technical Institute Income Statement For Year Ended December 31, 2018 Revenues Training Fees Earned - $43,558 Tuition Fees Earned - $114,708 Total Revenues - $158,266 Expenses Depreciation Exp. Equip. - $12285 Salaries Exp. - $49864 Insurance Exp. - $3071 Rent Exp. - $24744 Teaching Supplies Exp. - $7642 Utilities Exp. - $5771 Advertising Exp. - $7214 Dep. Exp. Professional Lib. - $6142 Total Expenses $116,733 Net Income $41,533