Question

Oct.   1	S. Rey invested $45,000 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 in advance for four months' rent.
3 5	The company purchased $1,420 of computer supplies on credit from Harris Office Products. The company hired Lyn Addie as a part-time assistant for $125 per day, as needed.
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 Harris Office Products on October 3.
10	The company paid $875 cash for Lyn Addie's wages for seven days' work.
21	The company received $4,800 cash from Easy Leasing as payment on its account.
31	The company paid $400 cash in dividends.

1. Open ledger accounts (in T-account format) and post the journal entries from part 1 to them.  (It may be useful to prepare a trial balance, but is not required.)

2. Prepare adjusting journal entries as of October 31 given the following information:

1. The October 31 inventory count of computer supplies shows $580 still available.
2. One month has expired since the 12-month insurance premium was paid in advance.
3. As of October 31, Lyn Addie has not been paid for four days of work at $125 per day.
4. The computer system, acquired on October 1, is expected to have a four-year life with no salvage value, resulting in depreciation of $417.
5. The office equipment, acquired on October 1, is expected to have a five-year life with no salvage value, resulting in depreciation of $133.
6. One of the four months' prepaid rent has expired.

3. Post these entries to the T-accounts.  Prepare an adjusted trial balance as of the end of October.

Using the adjusted trial balance, complete #5-#8:

4. Prepare an income statement for the month ended October 30, 2016.

5. Prepare a statement of retained earnings for the month ended October 30, 2016.

6. Prepare a classified balance sheet as of October 30, 2016.

7. Record the necessary closing entries for Business Solutions.  (Do not post.)

Just the balance sheet

Answer 1

Adjusted Trial Balance
Account Titles	Debit	Credit
Cash	$41,585
Prepaid Insurance	$2,035
Prepaid Rent	$2,475
Computer supplies	$580
Computer system	$20,000
Accumulated depreciation-Computer sys.		$417
Office Equipment	$8,000
Accumulated depreciation-office equip.		$133
Salaries payable		$500
Common Stock		$73,000
Dividend	$400
Service Revenue		$4,800
Salaries expense	$1,375
Computer supplies expense	$840
Insurance expense	$185
Depreciation expense-Computer system	$417
Depreciation expense-office equipment	$133
Rent expense	$825
Total	$78,850	$78,850
Income Statement
for the month ended October 30, 2016
Account Titlles	Amount
Service Revenue		$4,800
Less: Operating Expenses
Salaries expense	$1,375
Computer supplies expense	$840
Insurance expense	$185
Depreciation expense-Computer system	$417
Depreciation expense-office equipment	$133
Rent expense	$825
Total Operating Expenses		$3,775
Operating Income		$1,025
Statement of retained earnings
for the period ended October 30, 2016
Particulars	Amount
Beginning balance of retained earnings	$0
Add: Net Income	$1,025
Less: Dividend	($400)
Ending Balance of retained earnings	$625
Balance sheet
as of October 30, 2016
	Amount
ASSETS
Current assets:
Cash	$41,585
Prepaid Insurance	$2,035
Prepaid Rent	$2,475
Computer supplies	$580
Total Current Assets		$46,675
Property, plant and equipment:
Computer system	$20,000
Accumulated depreciation-Computer sys.	($417)	$19,583
Office Equipment	$8,000
Accumulated depreciation-office equip.	($133)	$7,867
PPE, net		$27,450
Total Assets		$74,125
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Salary payable		$500
Stockholder's Equity:
Common Stock	$73,000
Retained earnings	$625
Total Stockholder's Equity		$73,625
Total Liabilities and stockholder's equity		$74,125