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219
Problem 3-6B (Continued)
Part 2
Closing entries (all dated December 31)
Instructor note: Entries are shown without an account reference column because no posting is required.
(1) Professional Fees Earned ……………………… 59,600
Rent Earned ………………………………………….. 4,500
(2) Income Summary ………………………………….. 37,530
Depreciation Expense—Building …….. 2,000
Depreciation Expense—Equipment …. 1,000
Wages Expense………………………………. 18,500
(3) Income Summary ………………………………….. 28,890
Retained Earnings ………………………….. 28,890
Close Income Summary account.
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Problem 3-7B (15 minutes)
1.
Z
6.
F
11.
A
16.
E
3.
B
8.
E
13.
E
18.
A
5.
C
10.
C
15.
A
20.
Z
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SERIAL PROBLEM – SP 3
Serial Problem, Business Solutions (150 minutes) — Part 1
<Note: The general ledger is shown at the end of this assignment>
Journal entries
Dec. 2 Advertising Expense ……………………………. 655 1,025
Cash ……………………………………………..101 1,025
Paid share of mall advertising costs.
14 Cash ……………………………………………………. 101 1,500
Unearned Computer Services Revenue …236 1,500
Received advance on work to be performed.
15 Computer Supplies ……………………………… 126 1,100
Accounts Payable ………………………….201 1,100
Purchased supplies on credit.
16 No entry recorded in the journal.
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Serial Problem, SP 3 (Continued)
Part 2
Adjusting entries
Dec. 31 Computer Supplies Expense …………………….652 3,065
Computer Supplies …………………………...126 3,065
Adjustment for supplies used (supplies
balance less cost of supplies available).
31 Depreciation Expense–Computer Equip …….613 1,250
Accumulated Depreciation—
Computer Equipment ………………………168 1,250
Adjustment for computer equipment depreciation:
Cost ………………………………………………… $20,000
Predicted life ……………………………………. 4 years
Annual depreciation (cost/life) …………… $5,000
Expense for three months …………………. $1,250
31 Depreciation Expense—Office Equip …………612 400
Accumulated Depreciation—
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Serial Problem, SP 3 (Continued)
Part 3
BUSINESS SOLUTIONS
Adjusted Trial Balance
December 31, 2019
Debit Credit
Cash ………………………………………………………………… $ 48,372
Accounts receivable …………………………………………. 5,668
Accounts payable …………………………………………….. 1,100
Wages payable …………………………………………………. 500
Unearned computer services revenue ………………. 1,500
Common stock ………………………………………………….. 73,000
Retained earnings ……………………………………………… 0
Dividends ………………………………………………………….. 7,100
Computer services revenue ………………………………. 31,284
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Serial Problem, SP 3 (Continued)
Part 4
BUSINESS SOLUTIONS
Income Statement
For Three Months Ended December 31, 2019
Revenue
Computer services revenue ………………………………… $31,284
Expenses
Depreciation expense—Office equipment …………… $ 400
Part 5
BUSINESS SOLUTIONS
Statement of Retained Earnings
For Three Months Ended December 31, 2019
Retained earnings, October 1, 2019 ………………………. $ 0
Plus: Net income …………………………………………………. 14,460
14,460
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Serial Problem, SP 3 (Continued)
Part 6
BUSINESS SOLUTIONS
Balance Sheet
December 31, 2019
Assets
Cash ……………………………………………………………………… $ 48,372
Accounts receivable ……………………………………………… 5,668
Liabilities
Accounts payable ………………………………………………….. $ 1,100
Wages payable ……………………………………………………… 500
Unearned computer services revenue ……………………. 1,500
Total liabilities ………………………………………………………. 3,100
Equity
Common stock ……………………………………………………… 73,000
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Serial Problem, SP 3 (Continued)
Part 7
Closing entries
2019
Dec. 31 Computer Services Revenue …………………….. 403 31,284
Income Summary ……………………………….. 901 31,284
Close the revenue account.
31 Income Summary ……………………………………… 901 16,824
Depreciation Exp–Office Equipment ……. 612 400
Depreciation Exp–Computer Equipment .. 613 1,250
31 Income Summary ……………………………………… 901 14,460
Retained Earnings ……………………………… 318 14,460
Close the Income Summary account.
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Serial Problem, SP 3 (Continued)
Part 8
BUSINESS SOLUTIONS
Post-Closing Trial Balance
December 31, 2019
Debit Credit
Cash ………………………………………………………………………. $ 48,372
Accounts receivable ………………………………………………. 5,668
Computer equipment ……………………………………………… 20,000
Accumulated depreciation—Computer equipment ….. 1,250
Accounts payable…………………………………………………… 1,100
Wages payable ………………………………………………………. 500
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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 December 31.]
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
20
1,728
40,327
22
1,400
41,727
31
875
40,852
31
3,600
37,252
Nov.
1
320
36,932
2
4,633
41,565
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
3
500
36,739
4
3,950
40,689
10
750
39,939
14
1,500
41,439
20
5,625
47,064
28
3,000
50,064
29
192
49,872
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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
28
5,208
5,208
Nov.
8
5,668
18
2,208
8,668
24
3,950
Dec.
4
3,950
8,668
28
3,000
5,668
Computer Supplies
Acct. No. 126
Date
Explanation
PR
Debit
Credit
Balance
Oct.
3
1,420
1,420
Nov.
5
1,125
2,545
Dec.
15
1,100
3,645
31
3,065
580
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
Oct.
2
3,300
3,300
Dec.
31
2,475
825
Acct. No. 163
Date
Explanation
PR
Debit
Credit
Balance
Oct.
1
8,000
8,000
Acct. No. 164
Date
Explanation
PR
Debit
Credit
Balance
Dec.
31
400
400