SERIAL PROBLEM — SP 5
Serial Problem — SP 5, Business Solutions (150 minutes) Part 1
Journal entries
Jan. 4………………………………………………………………….Wages Expense
5………………………………………………………………….Cash 101
25,000
……………………………………………………………………..S. Rey, Capital 301
……………………………………………………………………..25,000
Additional investment by owner.
9………………………………………………………………….Cash 101
11………………………………………………………………….Accounts Receivable—
5,200
Sold merchandise on credit.
To record cost of Jan. 13 sale.
15…………………………………………………………………Merchandise Inventory
600
Paid freight on incoming merchandise.
Collected cash revenue from customer.
Serial Problem — SP 5 (Continued)
Jan. 17…………………………………………………………………Accounts Payable
Paid account payable within discount period.
(Discount taken = $5,800 x .01 = $58)
20*………………………………………………………………..Sales Returns and
Allowances ………………………………………………………….414 500
……………………………………………………………………..Accounts Receivable—
Liu Corp……………………………………………………………….106.5 500
Customer returned defective goods.
* Business Solutions leaves the cost of defective
products in its costs of goods sold. If it did not,
the following entry would have been recorded:
Loss from Defective Merchandise......808 320
………………………………………………………Cost of Goods Sold 502 320
22…………………………………………………………………Cash 101
Collected accounts receivable.
January 13 sale ……………………………….
………………………………………………………..$5,2
24…………………………………………………………………Accounts Payable
Returned merchandise for credit.
Purchased merchandise for resale.
26…………………………………………………………………Accounts Receivable—
KC, Inc…………………………………………………………………106.8 5,800
……………………………………………………………………..Sales 413
5,800
Sold merchandise on credit.
26…………………………………………………………………Cost of Goods Sold
To record cost of Jan. 26 sale.
31…………………………………………………………………Wages Expense
Paid employee wages.
Serial Problem — SP 5 (Continued)
Paid three months’ rent in advance.
3…………………………………………………………………Accounts Payable
201………………………………………………………………….8,504
5…………………………………………………………………Advertising Expense
Purchased ad in local newspaper.
11…………………………………………………………………Cash 101
Collected accounts receivable.
15………………………………………………………………..S. Rey, Withdrawals
Owner withdrew cash.
23 …………………………………………………………………Accounts Receivable—
Sold merchandise on credit.
23…………………………………………………………………Cost of Goods Sold
To record cost of Feb. 23 sale.
26………………………………………………………………..Wages Expense
Paid employee.
27…………………………………………………………………Mileage Expense
Reimbursed Rey for business mileage.
Serial Problem — SP 5 (Continued)
Mar. 8…………………………………………………………………Computer Supplies
Purchased supplies on credit.
9…………………………………………………………………Cash 101
3,220…………………………………………………………………
Accounts Rec.—Delta Co. …………………106.7 3,220
Collected accounts receivable.
11…………………………………………………………………Repairs
960
Paid for computer repairs.
16…………………………………………………………………Cash 101
5,260
Collected cash revenue from customer.
19…………………………………………………………………Accounts Payable
3,830
24…………………………………………………………………Accounts Receivable—
Billed customer for services.
25 ………………………………………………………………..Accounts Receivable—
……………………………………………………………………..Sales 413
2,800
Sold merchandise on credit.
25…………………………………………………………………Cost of Goods Sold
……………………………………………………………………..Merchandise Inventory
119 ……………………………………………………………………. 2,002
To record cost of March 25 sale.
30…………………………………………………………………Accounts Receivable—
2,220
Sold merchandise on credit.
30…………………………………………………………………Cost of Goods Sold
To record cost of March 30 sale.
31…………………………………………………………………Mileage Expense
128
Reimbursed Rey for business mileage.
Serial Problem — SP 5 (Continued)
Part 2
Ledger accounts as of March 31 before posting of March 31 adjusting entries
Cash Acct. No. 101
Date Explanation PR Debit Credit Balance
Dec. 31 Balance 48,372
Jan. 4 625 47,747
5 25,000 72,747
9 2,668 75,415
15 600 74,815
Accounts Receivable—Alex’s Engineering Co. Acct. No. 106.1
Date Explanation PR Debit Credit Balance
Dec. 31 Balance 0
Jan. 11 5,500 5,500
Feb. 11 5 ,500 0
Accounts Receivable—Wildcat Services Acct. No. 106.2
Date Explanation PR Debit Credit Balance
Serial Problem — SP 5 (Continued)
Accounts Receivable—Easy Leasing Acct. No. 106.3
Date Explanation PR Debit Credit Balance
Dec. 31 Balance 0
Mar. 24 9 ,047 9 ,047
Accounts Receivable—IFM Co. Acct. No. 106.4
Date Explanation PR Debit Credit Balance
Dec. 31 Balance 3,000
Mar. 30 2 ,220 5 ,220
Accounts Receivable—Liu Corporation Acct. No. 106.5
Date Explanation PR Debit Credit Balance
Dec. 31 Balance 0
Accounts Receivable—Gomez Co. Acct. No. 106.6
Date Explanation PR Debit Credit Balance
Accounts Receivable—Delta Co. Acct. No. 106.7
Date Explanation PR Debit Credit Balance
Accounts Receivable—KC, Inc. Acct. No. 106.8
Date Explanation PR Debit Credit Balance
Serial Problem — SP 5 (Continued)
Accounts Receivable—Dream, Inc. Acct. No. 106.9
Date Explanation PR Debit Credit Balance
Dec. 31 Balance 0
Merchandise Inventory Acct. No. 119
Date Explanation PR Debit Credit Balance
Dec. 31 Balance 0
Jan. 7 5,800 5,800
13 3,560 2,240
Computer Supplies Acct. No. 126
Date Explanation PR Debit Credit Balance
Prepaid Insurance Acct. No. 128
Date Explanation PR Debit Credit Balance
Dec. 31 Balance 1,665
Prepaid Rent Acct. No. 131
Date Explanation PR Debit Credit Balance
Office Equipment Acct. No. 163
Date Explanation PR Debit Credit Balance
Serial Problem — SP 5 (Continued)
Accumulated Depreciation—Office Equipment Acct. No. 164
Date Explanation PR Debit Credit Balance
Computer Equipment Acct. No. 167
Date Explanation PR Debit Credit Balance
Accumulated Depreciation—Computer Equipment Acct. No. 168
Date Explanation PR Debit Credit Balance
Wages Payable Acct. No. 210
Date Explanation PR Debit Credit Balance
Unearned Computer Services Revenue Acct. No. 236
Date Explanation PR Debit Credit Balance
Jan. 11 1,500 0
Serial Problem — SP 5 (Continued)
S. Rey, Capital Acct. No. 301
Date Explanation PR Debit Credit Balance
105,360
S. Rey, Withdrawals Acct. No. 302
Date Explanation PR Debit Credit Balance
Computer Services Revenue Acct. No. 403
Date Explanation PR Debit Credit Balance
Jan. 11 7,000 7,000
25,307
Sales Acct. No. 413
Date Explanation PR Debit Credit Balance
Jan. 13 5,200 5,200
19,240
Sales Returns and Allowances Acct. No. 414
Date Explanation PR Debit Credit Balance
Serial Problem — SP 5 (Continued)
Sales Discounts Acct. No. 415
Date Explanation PR Debit Credit Balance
Jan. 22 47 47
Cost of Goods Sold Acct. No. 502
Date Explanation PR Debit Credit Balance
Jan. 13 3,560 3,560
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
Wages Expense Acct. No. 623
Date Explanation PR Debit Credit Balance
Jan. 4 125 125
Insurance Expense Acct. No. 637
Date Explanation PR Debit Credit Balance
Rent Expense Acct. No. 640
Date Explanation PR Debit Credit Balance
Serial Problem — SP 5 (Continued)
Computer Supplies Expense Acct. No. 652
Date Explanation PR Debit Credit Balance
Advertising Expense Acct. No. 655
Date Explanation PR Debit Credit Balance
Mileage Expense Acct. No. 676
Date Explanation PR Debit Credit Balance
Miscellaneous Expenses Acct. No. 677
Date Explanation PR Debit Credit Balance
Repairs Expense—Computer Acct. No. 684
Date Explanation PR Debit Credit Balance