Serial Problem, SP 3 (Continued)
Part 4
BUSINESS SOLUTIONS
Income Statement
For Three Months Ended December 31, 2015
Revenue
Computer services revenue……….……………………….. $31,284
Expenses
Depreciation expense—Office equipment………….… $ 400
Depreciation expense—Computer equipment......... 1,250
Wages expense…………………..…………….……….…….… 3,875
Repairs expense—Computer…………………………..….. 1,305
Total expenses…………….………………….….…….……….. 16,824
Net income……………..……………………………………..…….. $14,460
Part 5
BUSINESS SOLUTIONS
Statement of Retained Earnings
For Three Months Ended December 31, 2015
Retained earnings, October 1, 2015……….….….….…… $ 0
Plus: Net income…………….……………….…………..……… 14,460
14,460
Serial Problem, SP 3 (Continued)
Part 6
BUSINESS SOLUTIONS
Balance Sheet
December 31, 2015
Assets
Cash …………..……………………..……………..………………….. $ 48,372
Accounts receivable …………………….…….….……….……. 5,668
Computer supplies ……………….……………….……….….…. 580
Liabilities
Accounts payable……………….……………….………………… $ 1,100
Wages payable………………………………………………………. 500
Unearned computer services revenue……………….…… 1,500
Total liabilities…………………………….………………….….….. 3,100
Equity
Serial Problem, SP 3 (Continued)
Part 7
Closing entries
2015
Dec. 31 Computer Services Revenue …………………….. 403 31,284
Income Summary………………..….…….……. 901 31,284
To close the revenue account.
31 Income Summary…………………….………………… 901 16,824
Depreciation Exp–Office Equipment....... 612 400
Depreciation Exp–Computer Equipment... 613 1,250
Wages Expense ………………………….….….. 623 3,875
Insurance Expense …….….……….……….… 637 555
Rent Expense ……………..….……….………... 640 2,475
31 Income Summary……..………………..……………... 901 14,460
Retained Earnings………………..…………….. 318 14,460
To close the Income Summary account.
Serial Problem, SP 3 (Continued)
Part 8
BUSINESS SOLUTIONS
Post-Closing Trial Balance
December 31, 2015
Debit Credit
Cash…………………………………..……………..…………….…….. $ 48,372
Accounts receivable……….………………….…………………… 5,668
Computer supplies………..…………………..……………….….. 580
Prepaid insurance…………..……………….…..……….……….. 1,665
Prepaid rent……………………………..…………………………….. 825
Common stock…………..…………………….………………..…… 73,000
Retained earnings…………………………..….….……….……... _______ 7,360
Totals………….……………………..……………..…….…….………. $ 85,110 $ 85,110
Serial Problem, SP 3 (Continued)
[Instructor Note: Ledger includes all entries from prior three months. The Working
Papers shorten the solution by showing account balances as of November 30.]
General Ledger
Cash Acct. No. 101
Date Explanation PR Debit Credit Balance
Oct. 1 45,000 45,000
2 3,300 41,700
5 2,220 39,480
8 1,420 38,060
15 4,800 42,860
17 805 42,055
5 1,125 40,440
18 2,208 42,648
22 250 42,398
28 384 42,014
30 1,750 40,264
30 2,000 38,264
Dec. 2 1,025 37,239
Serial Problem, SP 3 (Continued)
Accounts Receivable Acct. No. 106
Date Explanation PR Debit Credit Balance
Oct. 6 4,800 4,800
12 1,400 6,200
15 4,800 1,400
22 1,400 0
28 5,208 5,208
Nov. 8 5,668 10,876
Computer Supplies Acct. No. 126
Date Explanation PR Debit Credit Balance
Oct. 3 1,420 1,420
Prepaid Insurance Acct. No. 128
Date Explanation PR Debit Credit Balance
Oct. 5 2,220 2,220
Dec. 31 555 1,665
Prepaid Rent Acct. No. 131
Date Explanation PR Debit Credit Balance
Office Equipment Acct. No. 163
Date Explanation PR Debit Credit Balance
Oct. 1 8,000 8,000
Accumulated Depreciation—Office Equipment Acct. No. 164
Date Explanation PR Debit Credit Balance
Dec. 31 400 400
Serial Problem, SP 3 (Continued)
Computer Equipment Acct. No. 167
Accumulated Depreciation—Computer Equipment Acct. No. 168
Date Explanation PR Debit Credit Balance
Dec. 31 1,250 1,250
Accounts Payable Acct. No. 201
Wages Payable Acct. No. 210
Date Explanation PR Debit Credit Balance
Dec. 31 500 500
Unearned Computer Services Revenue Acct. No. 236
Date Explanation PR Debit Credit Balance
Common Stock Acct. No. 307
Date Explanation PR Debit Credit Balance
Oct. 1 73,000 73,000
Retained Earnings Acct. No. 318
Date Explanation PR Debit Credit Balance
Dividends Acct. No. 319
Date Explanation PR Debit Credit Balance
Serial Problem, SP 3 (Continued)
Computer Services Revenue Acct. No. 403
Date Explanation PR Debit Credit Balance
Oct. 6 4,800 4,800
12 1,400 6,200
28 5,208 11,408
Depreciation Expense—Office Equipment Acct. No. 612
Date Explanation PR Debit Credit Balance
Depreciation Expense—Computer Equipment Acct. No. 613
Date Explanation PR Debit Credit Balance
Dec. 31 1,250 1,250
31 Closing 1,250 0
Wages Expense Acct. No. 623
Date Explanation PR Debit Credit Balance
Insurance Expense Acct. No. 637
Date Explanation PR Debit Credit Balance
Dec. 31 555 555
31 Closing 555 0
Rent Expense Acct. No. 640
Date Explanation PR Debit Credit Balance
Serial Problem, SP 3 (Concluded)
Computer Supplies Expense Acct. No. 652
Date Explanation PR Debit Credit Balance
Dec. 31 3,065 3,065
31 Closing 3,065 0
Advertising Expense Acct. No. 655
Date Explanation PR Debit Credit Balance
Mileage Expense Acct. No. 676
Date Explanation PR Debit Credit Balance
Miscellaneous Expense Acct. No. 677
Date Explanation PR Debit Credit Balance
Nov. 22 250 250
Dec. 31 Closing 250 0
Repairs Expense—Computer Acct. No. 684
Date Explanation PR Debit Credit Balance
Oct. 17 805 805
Dec. 3 500 1,305
31 Closing 1,305 0
Income Summary Acct. No. 901
Date Explanation PR Debit Credit Balance