Expenses refer to cash outflows incurred during the course of the business and possesses debit balance. On the other hand, income or revenues refer to the returns and possess credit balance according to the principles and laws of accounting. In addition, an asset always has a debit balance because assets are owned by the business. On the other hand, liabilities possess credit balance because it creates an obligation of debt for the business. Requirement 1: To Determine: Journal Entries for the transactions of Business Solutions

Question

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Answer 1

Question

Chapter 2, Problem 2SP

To determine

Introduction:

Expenses refer to cash outflows incurred during the course of the business and possesses debit balance. On the other hand, income or revenues refer to the returns and possess credit balance according to the principles and laws of accounting. In addition, an asset always has a debit balance because assets are owned by the business. On the other hand, liabilities possess credit balance because it creates an obligation of debt for the business.

Requirement 1:

To Determine:

Journal Entries for the transactions of Business Solutions

Expert Solution

Answer to Problem 2SP

Solution:

Date	Particulars	Debit Amount	Credit Amount
01.10.2015	Cash	45,000
	Office Equipment	8,000
	Computer Equipment	20,000
	Capital		73,000
	(Owner invests cash and equipment as capital)
02.10.2015	Prepaid Rent	3,300
	Cash		3,300
	(Paid for months’ rent in advance)
03.10.2015	Computer Supplies	1,420
	Accounts Payable		1,420
	(purchased supplies on credit)
05.10.2015	Prepaid Insurance	2,220
	Cash		2,220
	(Paid 12 months’ premium in advance)
06.10.2015	Accounts Receivable	4,800
	Computer Services Revenue		4,800
	(Billed customer for services)
08.10.2015	Accounts Payable	1,420
	Cash		1,420
	(Paid balance due on accounts payable)
12.10.2015	Accounts Receivable	1,400
	Computer Service Revenue		1,400
	(Billed customer for services)
15.10.2015	Cash	4,800
	Accounts Receivable		4,800
	(Collected accounts receivable)
17.10.2015	Repairs Expense − Computer	805
	Cash		805
	(Paid for computer repairs)
20.102015	Advertising Expense	1,728
	Cash		1,728
	(Purchased ads in local newspaper)
22.10.2015	Cash	1,400
	Accounts Receivable		1,400
	(Collected Accounts Receivable)
28.10.2015	Accounts Receivable	5,208
	Computer Service Revenue		5,208
	(Billed customer for services)
31.10.2015	Wages Expense	875
	Cash		875
	(Paid employee for part time work)
31.10.2015	Drawing	3,600
	Cash		3,600
	(Withdrew cash for personal use)
01.11.2015	Mileage Expense	320
	Cash		320
	(Reimbursed R for mileage)
02.11.2015	Cash	4,633
	Computer Service Revenue		4,633
	(Collected cash revenue from client)
05.11.2015	Computer Supplies	1,125
	Cash		1,125
	(Purchased computer supplies for cash)
08.11.2015	Accounts Receivable	5,668
	Computer Service Revenue		5,668
	(Billed customer for services)
18.11.2015	Cash	2,208
	Accounts Receivable		2,208
	(Collected Accounts Receivable)
22.11.2015	Miscellaneous Expenses	250
	Cash		250
	(Record donation)
24.11.2015	Accounts Receivable	3,950
	Computer Service Revenue		3,950
	(Billed customer for services)
28.11.2015	Mileage Expense	384
	Cash		384
	(Reimbursed R for mileage)
30.11.2015	Wages Expense	1,750
	Cash		1,750
	(Paid employee for part time work)
30.11.2015	Drawing	2,000
	Cash		2,000
	(Withdrew Cash for personal use)

Explanation of Solution

Explanations:

On October 1, increase in asset is debited. As Santana Rey is raising equity by means of contributing cash and equipment, the asset of the company increases. Increase in equity is credited.

On October 2, rent for four months has been paid in advance. Prepaid Rent is an asset as it is an expense that has not expired as on the date when the books were prepared. Increase in current asset is debited.

On October 3, computer supplies were purchased on credit. Computer Supplies are an asset to the company and an increase in asset is debited. It has been purchased on account thereby increasing the liability. Increase in liability is credited.

On October 5, Insurance Premium is paid in advance. Prepaid Insurance is an asset as it is an expense that has not expired as on the date when the books were prepared. Increase in current asset is debited.

On October 6, services were paid but fees have not been received so far. As such, money would be collected later. Receivables account will be created that is debited as it is a current asset.

On October 8,

payment is made for the computer supplies that were acquired on credit. Since the liability is decreased, accounts payable account is debited.

On October 12, services were paid but fees have not been received so far. As such, money would be collected later. Receivables account will be created that is debited as it is a current asset.

On October 15, payment for the services rendered to Easy Leasing worth $4,800 has been received thereby reducing accounts receivables (asset) by $4,800. However, another asset (Cash) is increased by $4,800.

On October 17, amount is paid for repairing computers. Repairs are an expense and increase in expense is debited.

On October 20, advertisement in local newspaper is purchased. Advertising is an expense and increase in expense is debited.

On October 22, payment for the services rendered to Easy Leasing worth $1,400 has been received thereby reducing accounts receivables (asset) by $1,400. However, another asset (Cash) is increased by $1,400.

On October 28, payment has not been received for the services rendered to IFM company thereby increasing the accounts receivable account by $5,208.

On October 31, amount is paid for wages. Wages is an expense and increase in expense is debited.

On October 31, Cash is withdrawn for personal use. Increase in withdrawal decreases cash. As such Drawing account is debited.

On November 1, amount is reimbursed for mileage. Mileage is an expense and increase in expense is debited.

On November 2, payment for the services rendered to L Corporation worth $4,633 has been received thereby reducing accounts receivables (asset) by $4,633. However, another asset (Cash) is increased by $4,633.

On November 5, computer supplies are purchased for cash.

On November 8, payment has not been received for the services rendered to Gomez Co. thereby increasing the accounts receivable account by $5,668.

On November 18, payment for the services rendered to IFM Corporation worth $2,208 has been received thereby reducing accounts receivables (asset) by $2,208. However, another asset (Cash) is increased by $2,208.

On November 22, Cash is paid on general administrative expense. Miscellaneous expenses are an expense and increase in expense is debited.

On November 24, payment has not been received for the services rendered to Alex’s Engineering Co. thereby increasing the accounts receivable account by $3,950.

No entry is needed for the transaction on November 25^t^h regarding the bill sent to IFM for the past payment of $3,000 due as this is just a reminder to make the payment.

On November 28, amount is reimbursed for mileage. Mileage is an expense and increase in expense is debited.

On November 30, wages were paid. Wages is an expense and increase in expense is debited.

On November 30, Cash is withdrawn for personal use. Increase in withdrawal decreases cash. As such Drawing account is debited.

Requirement 2:

To determine

To Determine:

Ledger Accounts to post the above Journal Entries

Requirement 2:

Expert Solution

Explanation of Solution

Explanation:

The journal entries mentioned above can be summarized using balance column format. Following are the different general ledger accounts:

Cash

Date (2015)	PR	Debit	Credit	Balance
Oct.1		45,000		45,000
Oct.2			3,300	41,700
Oct.5			2,220	39,480
Oct.8			1,420	38,060
Oct.15		4,800		42,860
Oct.17			805	42,055
Oct.20			1,728	40,327
Oct.22		1,400		41,727
Oct.31			875	40,852
Oct.31			3,600	37,252
Nov.1			320	36,932
Nov.2		4,633		41,565
Nov.5			1,125	40,440
Nov.18		2,208		42,648
Nov.22			250	42,398
Nov.28			384	42,014
Nov.30			1,750	40,264
Nov.30			2,000	38,264

Accounts Receivable

Date (2015)	PR	Debit	Credit	Balance
Oct.6		4,800		4,800
Oct.12		1,400		6,200
Oct.15			4,800	1,400
Oct.22			1,400	0
Oct.28		5,208		5,208
Nov.8		5,668		10,876
Nov.18			2,208	8,668
Nov.24		3,950		12,618

Computer Supplies

Date (2015)	PR	Debit	Credit	Balance
Oct.3		1,420		1,420
Nov.5		1,125		2,545

Prepaid Insurance

Date (2015)	PR	Debit	Credit	Balance
Oct.3		2,220		2,220

Prepaid Rent

Date (2015)	PR	Debit	Credit	Balance
Oct.2		3,300		3,300

Office Equipment

Date (2015)	PR	Debit	Credit	Balance
Oct.1		8,000		8,000

Computer Equipment

Date (2015)	PR	Debit	Credit	Balance
Oct.1		20,000		20,000

Accounts Payable

Date (2015)	PR	Debit	Credit	Balance
Oct.3			1,420	1,420
Oct.8		1,420		0

Capital

Date (2015)	PR	Debit	Credit	Balance
Oct.1			73,000	73,000

Drawings

Date (2015)	PR	Debit	Credit	Balance
Oct.31		3,600		3,600
Nov.30		2,000		5,600

Computer Services Revenue

Date (2015)	PR	Debit	Credit	Balance
Oct.6			4,800	4,800
Oct.12			1,400	6,200
Oct.28			5,208	11,408
Nov.2			4,633	16,041
Nov.28			5,668	21,709
Nov.24			3,950	25,659

Wages Expense

Date (2015)	PR	Debit	Credit	Balance
Oct.31		875		875
Nov.30		1,750		2,625

Advertising Expense

Date (2015)	PR	Debit	Credit	Balance
Oct.20		1,728		1,728

Mileage Expense

Date (2015)	PR	Debit	Credit	Balance
Nov.1		320		320
Nov.28		384		704

Miscellaneous Expenses

Date (2015)	PR	Debit	Credit	Balance
Nov.22		250		250

Repairs Expenses

Date (2015)	PR	Debit	Credit	Balance
Oct.17		805		805

Requirement 3:

To determine

To Determine:

Trial Balance

Requirement 3:

Expert Solution

Explanation of Solution

Explanation:

Business Solutions

Trial Balance

At November 30, 2015

Particulars	Debit ($)	Credit ($)
Cash	38,264
Supplies	2,545
Equipment	8,000
Account Receivables	12,618
Prepaid Rent	3,300
Prepaid Insurance	2,220
Computer Equipment	20,000
Accounts Payable		0
Capital		73,000
Drawings	5,600
Wage Expenses	2,625
Advertisement	1,728
Mileage Expense	704
Misc. Expenses	250
Repair	805
Service Revenue		25,659
Total	98,659	98,659

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Answer 2

Question

Chapter 2, Problem 2SP

To determine

Introduction:

Expenses refer to cash outflows incurred during the course of the business and possesses debit balance. On the other hand, income or revenues refer to the returns and possess credit balance according to the principles and laws of accounting. In addition, an asset always has a debit balance because assets are owned by the business. On the other hand, liabilities possess credit balance because it creates an obligation of debt for the business.

Requirement 1:

To Determine:

Journal Entries for the transactions of Business Solutions

Expert Solution

Answer to Problem 2SP

Solution:

Date	Particulars	Debit Amount	Credit Amount
01.10.2015	Cash	45,000
	Office Equipment	8,000
	Computer Equipment	20,000
	Capital		73,000
	(Owner invests cash and equipment as capital)
02.10.2015	Prepaid Rent	3,300
	Cash		3,300
	(Paid for months’ rent in advance)
03.10.2015	Computer Supplies	1,420
	Accounts Payable		1,420
	(purchased supplies on credit)
05.10.2015	Prepaid Insurance	2,220
	Cash		2,220
	(Paid 12 months’ premium in advance)
06.10.2015	Accounts Receivable	4,800
	Computer Services Revenue		4,800
	(Billed customer for services)
08.10.2015	Accounts Payable	1,420
	Cash		1,420
	(Paid balance due on accounts payable)
12.10.2015	Accounts Receivable	1,400
	Computer Service Revenue		1,400
	(Billed customer for services)
15.10.2015	Cash	4,800
	Accounts Receivable		4,800
	(Collected accounts receivable)
17.10.2015	Repairs Expense − Computer	805
	Cash		805
	(Paid for computer repairs)
20.102015	Advertising Expense	1,728
	Cash		1,728
	(Purchased ads in local newspaper)
22.10.2015	Cash	1,400
	Accounts Receivable		1,400
	(Collected Accounts Receivable)
28.10.2015	Accounts Receivable	5,208
	Computer Service Revenue		5,208
	(Billed customer for services)
31.10.2015	Wages Expense	875
	Cash		875
	(Paid employee for part time work)
31.10.2015	Drawing	3,600
	Cash		3,600
	(Withdrew cash for personal use)
01.11.2015	Mileage Expense	320
	Cash		320
	(Reimbursed R for mileage)
02.11.2015	Cash	4,633
	Computer Service Revenue		4,633
	(Collected cash revenue from client)
05.11.2015	Computer Supplies	1,125
	Cash		1,125
	(Purchased computer supplies for cash)
08.11.2015	Accounts Receivable	5,668
	Computer Service Revenue		5,668
	(Billed customer for services)
18.11.2015	Cash	2,208
	Accounts Receivable		2,208
	(Collected Accounts Receivable)
22.11.2015	Miscellaneous Expenses	250
	Cash		250
	(Record donation)
24.11.2015	Accounts Receivable	3,950
	Computer Service Revenue		3,950
	(Billed customer for services)
28.11.2015	Mileage Expense	384
	Cash		384
	(Reimbursed R for mileage)
30.11.2015	Wages Expense	1,750
	Cash		1,750
	(Paid employee for part time work)
30.11.2015	Drawing	2,000
	Cash		2,000
	(Withdrew Cash for personal use)

Explanation of Solution

Explanations:

On October 1, increase in asset is debited. As Santana Rey is raising equity by means of contributing cash and equipment, the asset of the company increases. Increase in equity is credited.

On October 2, rent for four months has been paid in advance. Prepaid Rent is an asset as it is an expense that has not expired as on the date when the books were prepared. Increase in current asset is debited.

On October 3, computer supplies were purchased on credit. Computer Supplies are an asset to the company and an increase in asset is debited. It has been purchased on account thereby increasing the liability. Increase in liability is credited.

On October 5, Insurance Premium is paid in advance. Prepaid Insurance is an asset as it is an expense that has not expired as on the date when the books were prepared. Increase in current asset is debited.

On October 6, services were paid but fees have not been received so far. As such, money would be collected later. Receivables account will be created that is debited as it is a current asset.

On October 8,

payment is made for the computer supplies that were acquired on credit. Since the liability is decreased, accounts payable account is debited.

On October 12, services were paid but fees have not been received so far. As such, money would be collected later. Receivables account will be created that is debited as it is a current asset.

On October 15, payment for the services rendered to Easy Leasing worth $4,800 has been received thereby reducing accounts receivables (asset) by $4,800. However, another asset (Cash) is increased by $4,800.

On October 17, amount is paid for repairing computers. Repairs are an expense and increase in expense is debited.

On October 20, advertisement in local newspaper is purchased. Advertising is an expense and increase in expense is debited.

On October 22, payment for the services rendered to Easy Leasing worth $1,400 has been received thereby reducing accounts receivables (asset) by $1,400. However, another asset (Cash) is increased by $1,400.

On October 28, payment has not been received for the services rendered to IFM company thereby increasing the accounts receivable account by $5,208.

On October 31, amount is paid for wages. Wages is an expense and increase in expense is debited.

On October 31, Cash is withdrawn for personal use. Increase in withdrawal decreases cash. As such Drawing account is debited.

On November 1, amount is reimbursed for mileage. Mileage is an expense and increase in expense is debited.

On November 2, payment for the services rendered to L Corporation worth $4,633 has been received thereby reducing accounts receivables (asset) by $4,633. However, another asset (Cash) is increased by $4,633.

On November 5, computer supplies are purchased for cash.

On November 8, payment has not been received for the services rendered to Gomez Co. thereby increasing the accounts receivable account by $5,668.

On November 18, payment for the services rendered to IFM Corporation worth $2,208 has been received thereby reducing accounts receivables (asset) by $2,208. However, another asset (Cash) is increased by $2,208.

On November 22, Cash is paid on general administrative expense. Miscellaneous expenses are an expense and increase in expense is debited.

On November 24, payment has not been received for the services rendered to Alex’s Engineering Co. thereby increasing the accounts receivable account by $3,950.

No entry is needed for the transaction on November 25^t^h regarding the bill sent to IFM for the past payment of $3,000 due as this is just a reminder to make the payment.

On November 28, amount is reimbursed for mileage. Mileage is an expense and increase in expense is debited.

On November 30, wages were paid. Wages is an expense and increase in expense is debited.

On November 30, Cash is withdrawn for personal use. Increase in withdrawal decreases cash. As such Drawing account is debited.

Requirement 2:

To determine

To Determine:

Ledger Accounts to post the above Journal Entries

Requirement 2:

Expert Solution

Explanation of Solution

Explanation:

The journal entries mentioned above can be summarized using balance column format. Following are the different general ledger accounts:

Cash

Date (2015)	PR	Debit	Credit	Balance
Oct.1		45,000		45,000
Oct.2			3,300	41,700
Oct.5			2,220	39,480
Oct.8			1,420	38,060
Oct.15		4,800		42,860
Oct.17			805	42,055
Oct.20			1,728	40,327
Oct.22		1,400		41,727
Oct.31			875	40,852
Oct.31			3,600	37,252
Nov.1			320	36,932
Nov.2		4,633		41,565
Nov.5			1,125	40,440
Nov.18		2,208		42,648
Nov.22			250	42,398
Nov.28			384	42,014
Nov.30			1,750	40,264
Nov.30			2,000	38,264

Accounts Receivable

Date (2015)	PR	Debit	Credit	Balance
Oct.6		4,800		4,800
Oct.12		1,400		6,200
Oct.15			4,800	1,400
Oct.22			1,400	0
Oct.28		5,208		5,208
Nov.8		5,668		10,876
Nov.18			2,208	8,668
Nov.24		3,950		12,618

Computer Supplies

Date (2015)	PR	Debit	Credit	Balance
Oct.3		1,420		1,420
Nov.5		1,125		2,545

Prepaid Insurance

Date (2015)	PR	Debit	Credit	Balance
Oct.3		2,220		2,220

Prepaid Rent

Date (2015)	PR	Debit	Credit	Balance
Oct.2		3,300		3,300

Office Equipment

Date (2015)	PR	Debit	Credit	Balance
Oct.1		8,000		8,000

Computer Equipment

Date (2015)	PR	Debit	Credit	Balance
Oct.1		20,000		20,000

Accounts Payable

Date (2015)	PR	Debit	Credit	Balance
Oct.3			1,420	1,420
Oct.8		1,420		0

Capital

Date (2015)	PR	Debit	Credit	Balance
Oct.1			73,000	73,000

Drawings

Date (2015)	PR	Debit	Credit	Balance
Oct.31		3,600		3,600
Nov.30		2,000		5,600

Computer Services Revenue

Date (2015)	PR	Debit	Credit	Balance
Oct.6			4,800	4,800
Oct.12			1,400	6,200
Oct.28			5,208	11,408
Nov.2			4,633	16,041
Nov.28			5,668	21,709
Nov.24			3,950	25,659

Wages Expense

Date (2015)	PR	Debit	Credit	Balance
Oct.31		875		875
Nov.30		1,750		2,625

Advertising Expense

Date (2015)	PR	Debit	Credit	Balance
Oct.20		1,728		1,728

Mileage Expense

Date (2015)	PR	Debit	Credit	Balance
Nov.1		320		320
Nov.28		384		704

Miscellaneous Expenses

Date (2015)	PR	Debit	Credit	Balance
Nov.22		250		250

Repairs Expenses

Date (2015)	PR	Debit	Credit	Balance
Oct.17		805		805

Requirement 3:

To determine

To Determine:

Trial Balance

Requirement 3:

Expert Solution

Explanation of Solution

Explanation:

Business Solutions

Trial Balance

At November 30, 2015

Particulars	Debit ($)	Credit ($)
Cash	38,264
Supplies	2,545
Equipment	8,000
Account Receivables	12,618
Prepaid Rent	3,300
Prepaid Insurance	2,220
Computer Equipment	20,000
Accounts Payable		0
Capital		73,000
Drawings	5,600
Wage Expenses	2,625
Advertisement	1,728
Mileage Expense	704
Misc. Expenses	250
Repair	805
Service Revenue		25,659
Total	98,659	98,659

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Answer 3

Question

Chapter 2, Problem 2SP

To determine

Introduction:

Expenses refer to cash outflows incurred during the course of the business and possesses debit balance. On the other hand, income or revenues refer to the returns and possess credit balance according to the principles and laws of accounting. In addition, an asset always has a debit balance because assets are owned by the business. On the other hand, liabilities possess credit balance because it creates an obligation of debt for the business.

Requirement 1:

To Determine:

Journal Entries for the transactions of Business Solutions

Expert Solution

Answer to Problem 2SP

Solution:

Date	Particulars	Debit Amount	Credit Amount
01.10.2015	Cash	45,000
	Office Equipment	8,000
	Computer Equipment	20,000
	Capital		73,000
	(Owner invests cash and equipment as capital)
02.10.2015	Prepaid Rent	3,300
	Cash		3,300
	(Paid for months’ rent in advance)
03.10.2015	Computer Supplies	1,420
	Accounts Payable		1,420
	(purchased supplies on credit)
05.10.2015	Prepaid Insurance	2,220
	Cash		2,220
	(Paid 12 months’ premium in advance)
06.10.2015	Accounts Receivable	4,800
	Computer Services Revenue		4,800
	(Billed customer for services)
08.10.2015	Accounts Payable	1,420
	Cash		1,420
	(Paid balance due on accounts payable)
12.10.2015	Accounts Receivable	1,400
	Computer Service Revenue		1,400
	(Billed customer for services)
15.10.2015	Cash	4,800
	Accounts Receivable		4,800
	(Collected accounts receivable)
17.10.2015	Repairs Expense − Computer	805
	Cash		805
	(Paid for computer repairs)
20.102015	Advertising Expense	1,728
	Cash		1,728
	(Purchased ads in local newspaper)
22.10.2015	Cash	1,400
	Accounts Receivable		1,400
	(Collected Accounts Receivable)
28.10.2015	Accounts Receivable	5,208
	Computer Service Revenue		5,208
	(Billed customer for services)
31.10.2015	Wages Expense	875
	Cash		875
	(Paid employee for part time work)
31.10.2015	Drawing	3,600
	Cash		3,600
	(Withdrew cash for personal use)
01.11.2015	Mileage Expense	320
	Cash		320
	(Reimbursed R for mileage)
02.11.2015	Cash	4,633
	Computer Service Revenue		4,633
	(Collected cash revenue from client)
05.11.2015	Computer Supplies	1,125
	Cash		1,125
	(Purchased computer supplies for cash)
08.11.2015	Accounts Receivable	5,668
	Computer Service Revenue		5,668
	(Billed customer for services)
18.11.2015	Cash	2,208
	Accounts Receivable		2,208
	(Collected Accounts Receivable)
22.11.2015	Miscellaneous Expenses	250
	Cash		250
	(Record donation)
24.11.2015	Accounts Receivable	3,950
	Computer Service Revenue		3,950
	(Billed customer for services)
28.11.2015	Mileage Expense	384
	Cash		384
	(Reimbursed R for mileage)
30.11.2015	Wages Expense	1,750
	Cash		1,750
	(Paid employee for part time work)
30.11.2015	Drawing	2,000
	Cash		2,000
	(Withdrew Cash for personal use)

Explanation of Solution

Explanations:

On October 1, increase in asset is debited. As Santana Rey is raising equity by means of contributing cash and equipment, the asset of the company increases. Increase in equity is credited.

On October 2, rent for four months has been paid in advance. Prepaid Rent is an asset as it is an expense that has not expired as on the date when the books were prepared. Increase in current asset is debited.

On October 3, computer supplies were purchased on credit. Computer Supplies are an asset to the company and an increase in asset is debited. It has been purchased on account thereby increasing the liability. Increase in liability is credited.

On October 5, Insurance Premium is paid in advance. Prepaid Insurance is an asset as it is an expense that has not expired as on the date when the books were prepared. Increase in current asset is debited.

On October 6, services were paid but fees have not been received so far. As such, money would be collected later. Receivables account will be created that is debited as it is a current asset.

On October 8,

payment is made for the computer supplies that were acquired on credit. Since the liability is decreased, accounts payable account is debited.

On October 12, services were paid but fees have not been received so far. As such, money would be collected later. Receivables account will be created that is debited as it is a current asset.

On October 15, payment for the services rendered to Easy Leasing worth $4,800 has been received thereby reducing accounts receivables (asset) by $4,800. However, another asset (Cash) is increased by $4,800.

On October 17, amount is paid for repairing computers. Repairs are an expense and increase in expense is debited.

On October 20, advertisement in local newspaper is purchased. Advertising is an expense and increase in expense is debited.

On October 22, payment for the services rendered to Easy Leasing worth $1,400 has been received thereby reducing accounts receivables (asset) by $1,400. However, another asset (Cash) is increased by $1,400.

On October 28, payment has not been received for the services rendered to IFM company thereby increasing the accounts receivable account by $5,208.

On October 31, amount is paid for wages. Wages is an expense and increase in expense is debited.

On October 31, Cash is withdrawn for personal use. Increase in withdrawal decreases cash. As such Drawing account is debited.

On November 1, amount is reimbursed for mileage. Mileage is an expense and increase in expense is debited.

On November 2, payment for the services rendered to L Corporation worth $4,633 has been received thereby reducing accounts receivables (asset) by $4,633. However, another asset (Cash) is increased by $4,633.

On November 5, computer supplies are purchased for cash.

On November 8, payment has not been received for the services rendered to Gomez Co. thereby increasing the accounts receivable account by $5,668.

On November 18, payment for the services rendered to IFM Corporation worth $2,208 has been received thereby reducing accounts receivables (asset) by $2,208. However, another asset (Cash) is increased by $2,208.

On November 22, Cash is paid on general administrative expense. Miscellaneous expenses are an expense and increase in expense is debited.

On November 24, payment has not been received for the services rendered to Alex’s Engineering Co. thereby increasing the accounts receivable account by $3,950.

No entry is needed for the transaction on November 25^t^h regarding the bill sent to IFM for the past payment of $3,000 due as this is just a reminder to make the payment.

On November 28, amount is reimbursed for mileage. Mileage is an expense and increase in expense is debited.

On November 30, wages were paid. Wages is an expense and increase in expense is debited.

On November 30, Cash is withdrawn for personal use. Increase in withdrawal decreases cash. As such Drawing account is debited.

Requirement 2:

To determine

To Determine:

Ledger Accounts to post the above Journal Entries

Requirement 2:

Expert Solution

Explanation of Solution

Explanation:

The journal entries mentioned above can be summarized using balance column format. Following are the different general ledger accounts:

Cash

Date (2015)	PR	Debit	Credit	Balance
Oct.1		45,000		45,000
Oct.2			3,300	41,700
Oct.5			2,220	39,480
Oct.8			1,420	38,060
Oct.15		4,800		42,860
Oct.17			805	42,055
Oct.20			1,728	40,327
Oct.22		1,400		41,727
Oct.31			875	40,852
Oct.31			3,600	37,252
Nov.1			320	36,932
Nov.2		4,633		41,565
Nov.5			1,125	40,440
Nov.18		2,208		42,648
Nov.22			250	42,398
Nov.28			384	42,014
Nov.30			1,750	40,264
Nov.30			2,000	38,264

Accounts Receivable

Date (2015)	PR	Debit	Credit	Balance
Oct.6		4,800		4,800
Oct.12		1,400		6,200
Oct.15			4,800	1,400
Oct.22			1,400	0
Oct.28		5,208		5,208
Nov.8		5,668		10,876
Nov.18			2,208	8,668
Nov.24		3,950		12,618

Computer Supplies

Date (2015)	PR	Debit	Credit	Balance
Oct.3		1,420		1,420
Nov.5		1,125		2,545

Prepaid Insurance

Date (2015)	PR	Debit	Credit	Balance
Oct.3		2,220		2,220

Prepaid Rent

Date (2015)	PR	Debit	Credit	Balance
Oct.2		3,300		3,300

Office Equipment

Date (2015)	PR	Debit	Credit	Balance
Oct.1		8,000		8,000

Computer Equipment

Date (2015)	PR	Debit	Credit	Balance
Oct.1		20,000		20,000

Accounts Payable

Date (2015)	PR	Debit	Credit	Balance
Oct.3			1,420	1,420
Oct.8		1,420		0

Capital

Date (2015)	PR	Debit	Credit	Balance
Oct.1			73,000	73,000

Drawings

Date (2015)	PR	Debit	Credit	Balance
Oct.31		3,600		3,600
Nov.30		2,000		5,600

Computer Services Revenue

Date (2015)	PR	Debit	Credit	Balance
Oct.6			4,800	4,800
Oct.12			1,400	6,200
Oct.28			5,208	11,408
Nov.2			4,633	16,041
Nov.28			5,668	21,709
Nov.24			3,950	25,659

Wages Expense

Date (2015)	PR	Debit	Credit	Balance
Oct.31		875		875
Nov.30		1,750		2,625

Advertising Expense

Date (2015)	PR	Debit	Credit	Balance
Oct.20		1,728		1,728

Mileage Expense

Date (2015)	PR	Debit	Credit	Balance
Nov.1		320		320
Nov.28		384		704

Miscellaneous Expenses

Date (2015)	PR	Debit	Credit	Balance
Nov.22		250		250

Repairs Expenses

Date (2015)	PR	Debit	Credit	Balance
Oct.17		805		805

Requirement 3:

To determine

To Determine:

Trial Balance

Requirement 3:

Expert Solution

Explanation of Solution

Explanation:

Business Solutions

Trial Balance

At November 30, 2015

Particulars	Debit ($)	Credit ($)
Cash	38,264
Supplies	2,545
Equipment	8,000
Account Receivables	12,618
Prepaid Rent	3,300
Prepaid Insurance	2,220
Computer Equipment	20,000
Accounts Payable		0
Capital		73,000
Drawings	5,600
Wage Expenses	2,625
Advertisement	1,728
Mileage Expense	704
Misc. Expenses	250
Repair	805
Service Revenue		25,659
Total	98,659	98,659

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Answer 4

Question

Chapter 2, Problem 2SP

To determine

Introduction:

Expenses refer to cash outflows incurred during the course of the business and possesses debit balance. On the other hand, income or revenues refer to the returns and possess credit balance according to the principles and laws of accounting. In addition, an asset always has a debit balance because assets are owned by the business. On the other hand, liabilities possess credit balance because it creates an obligation of debt for the business.

Requirement 1:

To Determine:

Journal Entries for the transactions of Business Solutions

Expert Solution

Answer to Problem 2SP

Solution:

Date	Particulars	Debit Amount	Credit Amount
01.10.2015	Cash	45,000
	Office Equipment	8,000
	Computer Equipment	20,000
	Capital		73,000
	(Owner invests cash and equipment as capital)
02.10.2015	Prepaid Rent	3,300
	Cash		3,300
	(Paid for months’ rent in advance)
03.10.2015	Computer Supplies	1,420
	Accounts Payable		1,420
	(purchased supplies on credit)
05.10.2015	Prepaid Insurance	2,220
	Cash		2,220
	(Paid 12 months’ premium in advance)
06.10.2015	Accounts Receivable	4,800
	Computer Services Revenue		4,800
	(Billed customer for services)
08.10.2015	Accounts Payable	1,420
	Cash		1,420
	(Paid balance due on accounts payable)
12.10.2015	Accounts Receivable	1,400
	Computer Service Revenue		1,400
	(Billed customer for services)
15.10.2015	Cash	4,800
	Accounts Receivable		4,800
	(Collected accounts receivable)
17.10.2015	Repairs Expense − Computer	805
	Cash		805
	(Paid for computer repairs)
20.102015	Advertising Expense	1,728
	Cash		1,728
	(Purchased ads in local newspaper)
22.10.2015	Cash	1,400
	Accounts Receivable		1,400
	(Collected Accounts Receivable)
28.10.2015	Accounts Receivable	5,208
	Computer Service Revenue		5,208
	(Billed customer for services)
31.10.2015	Wages Expense	875
	Cash		875
	(Paid employee for part time work)
31.10.2015	Drawing	3,600
	Cash		3,600
	(Withdrew cash for personal use)
01.11.2015	Mileage Expense	320
	Cash		320
	(Reimbursed R for mileage)
02.11.2015	Cash	4,633
	Computer Service Revenue		4,633
	(Collected cash revenue from client)
05.11.2015	Computer Supplies	1,125
	Cash		1,125
	(Purchased computer supplies for cash)
08.11.2015	Accounts Receivable	5,668
	Computer Service Revenue		5,668
	(Billed customer for services)
18.11.2015	Cash	2,208
	Accounts Receivable		2,208
	(Collected Accounts Receivable)
22.11.2015	Miscellaneous Expenses	250
	Cash		250
	(Record donation)
24.11.2015	Accounts Receivable	3,950
	Computer Service Revenue		3,950
	(Billed customer for services)
28.11.2015	Mileage Expense	384
	Cash		384
	(Reimbursed R for mileage)
30.11.2015	Wages Expense	1,750
	Cash		1,750
	(Paid employee for part time work)
30.11.2015	Drawing	2,000
	Cash		2,000
	(Withdrew Cash for personal use)

Explanation of Solution

Explanations:

On October 1, increase in asset is debited. As Santana Rey is raising equity by means of contributing cash and equipment, the asset of the company increases. Increase in equity is credited.

On October 2, rent for four months has been paid in advance. Prepaid Rent is an asset as it is an expense that has not expired as on the date when the books were prepared. Increase in current asset is debited.

On October 3, computer supplies were purchased on credit. Computer Supplies are an asset to the company and an increase in asset is debited. It has been purchased on account thereby increasing the liability. Increase in liability is credited.

On October 5, Insurance Premium is paid in advance. Prepaid Insurance is an asset as it is an expense that has not expired as on the date when the books were prepared. Increase in current asset is debited.

On October 6, services were paid but fees have not been received so far. As such, money would be collected later. Receivables account will be created that is debited as it is a current asset.

On October 8,

payment is made for the computer supplies that were acquired on credit. Since the liability is decreased, accounts payable account is debited.

On October 12, services were paid but fees have not been received so far. As such, money would be collected later. Receivables account will be created that is debited as it is a current asset.

On October 15, payment for the services rendered to Easy Leasing worth $4,800 has been received thereby reducing accounts receivables (asset) by $4,800. However, another asset (Cash) is increased by $4,800.

On October 17, amount is paid for repairing computers. Repairs are an expense and increase in expense is debited.

On October 20, advertisement in local newspaper is purchased. Advertising is an expense and increase in expense is debited.

On October 22, payment for the services rendered to Easy Leasing worth $1,400 has been received thereby reducing accounts receivables (asset) by $1,400. However, another asset (Cash) is increased by $1,400.

On October 28, payment has not been received for the services rendered to IFM company thereby increasing the accounts receivable account by $5,208.

On October 31, amount is paid for wages. Wages is an expense and increase in expense is debited.

On October 31, Cash is withdrawn for personal use. Increase in withdrawal decreases cash. As such Drawing account is debited.

On November 1, amount is reimbursed for mileage. Mileage is an expense and increase in expense is debited.

On November 2, payment for the services rendered to L Corporation worth $4,633 has been received thereby reducing accounts receivables (asset) by $4,633. However, another asset (Cash) is increased by $4,633.

On November 5, computer supplies are purchased for cash.

On November 8, payment has not been received for the services rendered to Gomez Co. thereby increasing the accounts receivable account by $5,668.

On November 18, payment for the services rendered to IFM Corporation worth $2,208 has been received thereby reducing accounts receivables (asset) by $2,208. However, another asset (Cash) is increased by $2,208.

On November 22, Cash is paid on general administrative expense. Miscellaneous expenses are an expense and increase in expense is debited.

On November 24, payment has not been received for the services rendered to Alex’s Engineering Co. thereby increasing the accounts receivable account by $3,950.

No entry is needed for the transaction on November 25^t^h regarding the bill sent to IFM for the past payment of $3,000 due as this is just a reminder to make the payment.

On November 28, amount is reimbursed for mileage. Mileage is an expense and increase in expense is debited.

On November 30, wages were paid. Wages is an expense and increase in expense is debited.

On November 30, Cash is withdrawn for personal use. Increase in withdrawal decreases cash. As such Drawing account is debited.

Requirement 2:

To determine

To Determine:

Ledger Accounts to post the above Journal Entries

Requirement 2:

Expert Solution

Explanation of Solution

Explanation:

The journal entries mentioned above can be summarized using balance column format. Following are the different general ledger accounts:

Cash

Date (2015)	PR	Debit	Credit	Balance
Oct.1		45,000		45,000
Oct.2			3,300	41,700
Oct.5			2,220	39,480
Oct.8			1,420	38,060
Oct.15		4,800		42,860
Oct.17			805	42,055
Oct.20			1,728	40,327
Oct.22		1,400		41,727
Oct.31			875	40,852
Oct.31			3,600	37,252
Nov.1			320	36,932
Nov.2		4,633		41,565
Nov.5			1,125	40,440
Nov.18		2,208		42,648
Nov.22			250	42,398
Nov.28			384	42,014
Nov.30			1,750	40,264
Nov.30			2,000	38,264

Accounts Receivable

Date (2015)	PR	Debit	Credit	Balance
Oct.6		4,800		4,800
Oct.12		1,400		6,200
Oct.15			4,800	1,400
Oct.22			1,400	0
Oct.28		5,208		5,208
Nov.8		5,668		10,876
Nov.18			2,208	8,668
Nov.24		3,950		12,618

Computer Supplies

Date (2015)	PR	Debit	Credit	Balance
Oct.3		1,420		1,420
Nov.5		1,125		2,545

Prepaid Insurance

Date (2015)	PR	Debit	Credit	Balance
Oct.3		2,220		2,220

Prepaid Rent

Date (2015)	PR	Debit	Credit	Balance
Oct.2		3,300		3,300

Office Equipment

Date (2015)	PR	Debit	Credit	Balance
Oct.1		8,000		8,000

Computer Equipment

Date (2015)	PR	Debit	Credit	Balance
Oct.1		20,000		20,000

Accounts Payable

Date (2015)	PR	Debit	Credit	Balance
Oct.3			1,420	1,420
Oct.8		1,420		0

Capital

Date (2015)	PR	Debit	Credit	Balance
Oct.1			73,000	73,000

Drawings

Date (2015)	PR	Debit	Credit	Balance
Oct.31		3,600		3,600
Nov.30		2,000		5,600

Computer Services Revenue

Date (2015)	PR	Debit	Credit	Balance
Oct.6			4,800	4,800
Oct.12			1,400	6,200
Oct.28			5,208	11,408
Nov.2			4,633	16,041
Nov.28			5,668	21,709
Nov.24			3,950	25,659

Wages Expense

Date (2015)	PR	Debit	Credit	Balance
Oct.31		875		875
Nov.30		1,750		2,625

Advertising Expense

Date (2015)	PR	Debit	Credit	Balance
Oct.20		1,728		1,728

Mileage Expense

Date (2015)	PR	Debit	Credit	Balance
Nov.1		320		320
Nov.28		384		704

Miscellaneous Expenses

Date (2015)	PR	Debit	Credit	Balance
Nov.22		250		250

Repairs Expenses

Date (2015)	PR	Debit	Credit	Balance
Oct.17		805		805

Requirement 3:

To determine

To Determine:

Trial Balance

Requirement 3:

Expert Solution

Explanation of Solution

Explanation:

Business Solutions

Trial Balance

At November 30, 2015

Particulars	Debit ($)	Credit ($)
Cash	38,264
Supplies	2,545
Equipment	8,000
Account Receivables	12,618
Prepaid Rent	3,300
Prepaid Insurance	2,220
Computer Equipment	20,000
Accounts Payable		0
Capital		73,000
Drawings	5,600
Wage Expenses	2,625
Advertisement	1,728
Mileage Expense	704
Misc. Expenses	250
Repair	805
Service Revenue		25,659
Total	98,659	98,659

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Answer 5

Chapter 2, Problem 2SP

To determine

Introduction:

Expenses refer to cash outflows incurred during the course of the business and possesses debit balance. On the other hand, income or revenues refer to the returns and possess credit balance according to the principles and laws of accounting. In addition, an asset always has a debit balance because assets are owned by the business. On the other hand, liabilities possess credit balance because it creates an obligation of debt for the business.

Requirement 1:

To Determine:

Journal Entries for the transactions of Business Solutions

Expert Solution

Answer to Problem 2SP

Solution:

Date	Particulars	Debit Amount	Credit Amount
01.10.2015	Cash	45,000
	Office Equipment	8,000
	Computer Equipment	20,000
	Capital		73,000
	(Owner invests cash and equipment as capital)
02.10.2015	Prepaid Rent	3,300
	Cash		3,300
	(Paid for months’ rent in advance)
03.10.2015	Computer Supplies	1,420
	Accounts Payable		1,420
	(purchased supplies on credit)
05.10.2015	Prepaid Insurance	2,220
	Cash		2,220
	(Paid 12 months’ premium in advance)
06.10.2015	Accounts Receivable	4,800
	Computer Services Revenue		4,800
	(Billed customer for services)
08.10.2015	Accounts Payable	1,420
	Cash		1,420
	(Paid balance due on accounts payable)
12.10.2015	Accounts Receivable	1,400
	Computer Service Revenue		1,400
	(Billed customer for services)
15.10.2015	Cash	4,800
	Accounts Receivable		4,800
	(Collected accounts receivable)
17.10.2015	Repairs Expense − Computer	805
	Cash		805
	(Paid for computer repairs)
20.102015	Advertising Expense	1,728
	Cash		1,728
	(Purchased ads in local newspaper)
22.10.2015	Cash	1,400
	Accounts Receivable		1,400
	(Collected Accounts Receivable)
28.10.2015	Accounts Receivable	5,208
	Computer Service Revenue		5,208
	(Billed customer for services)
31.10.2015	Wages Expense	875
	Cash		875
	(Paid employee for part time work)
31.10.2015	Drawing	3,600
	Cash		3,600
	(Withdrew cash for personal use)
01.11.2015	Mileage Expense	320
	Cash		320
	(Reimbursed R for mileage)
02.11.2015	Cash	4,633
	Computer Service Revenue		4,633
	(Collected cash revenue from client)
05.11.2015	Computer Supplies	1,125
	Cash		1,125
	(Purchased computer supplies for cash)
08.11.2015	Accounts Receivable	5,668
	Computer Service Revenue		5,668
	(Billed customer for services)
18.11.2015	Cash	2,208
	Accounts Receivable		2,208
	(Collected Accounts Receivable)
22.11.2015	Miscellaneous Expenses	250
	Cash		250
	(Record donation)
24.11.2015	Accounts Receivable	3,950
	Computer Service Revenue		3,950
	(Billed customer for services)
28.11.2015	Mileage Expense	384
	Cash		384
	(Reimbursed R for mileage)
30.11.2015	Wages Expense	1,750
	Cash		1,750
	(Paid employee for part time work)
30.11.2015	Drawing	2,000
	Cash		2,000
	(Withdrew Cash for personal use)

Explanation of Solution

Explanations:

On October 1, increase in asset is debited. As Santana Rey is raising equity by means of contributing cash and equipment, the asset of the company increases. Increase in equity is credited.

On October 2, rent for four months has been paid in advance. Prepaid Rent is an asset as it is an expense that has not expired as on the date when the books were prepared. Increase in current asset is debited.

On October 3, computer supplies were purchased on credit. Computer Supplies are an asset to the company and an increase in asset is debited. It has been purchased on account thereby increasing the liability. Increase in liability is credited.

On October 5, Insurance Premium is paid in advance. Prepaid Insurance is an asset as it is an expense that has not expired as on the date when the books were prepared. Increase in current asset is debited.

On October 6, services were paid but fees have not been received so far. As such, money would be collected later. Receivables account will be created that is debited as it is a current asset.

On October 8,

payment is made for the computer supplies that were acquired on credit. Since the liability is decreased, accounts payable account is debited.

On October 12, services were paid but fees have not been received so far. As such, money would be collected later. Receivables account will be created that is debited as it is a current asset.

On October 15, payment for the services rendered to Easy Leasing worth $4,800 has been received thereby reducing accounts receivables (asset) by $4,800. However, another asset (Cash) is increased by $4,800.

On October 17, amount is paid for repairing computers. Repairs are an expense and increase in expense is debited.

On October 20, advertisement in local newspaper is purchased. Advertising is an expense and increase in expense is debited.

On October 22, payment for the services rendered to Easy Leasing worth $1,400 has been received thereby reducing accounts receivables (asset) by $1,400. However, another asset (Cash) is increased by $1,400.

On October 28, payment has not been received for the services rendered to IFM company thereby increasing the accounts receivable account by $5,208.

On October 31, amount is paid for wages. Wages is an expense and increase in expense is debited.

On October 31, Cash is withdrawn for personal use. Increase in withdrawal decreases cash. As such Drawing account is debited.

On November 1, amount is reimbursed for mileage. Mileage is an expense and increase in expense is debited.

On November 2, payment for the services rendered to L Corporation worth $4,633 has been received thereby reducing accounts receivables (asset) by $4,633. However, another asset (Cash) is increased by $4,633.

On November 5, computer supplies are purchased for cash.

On November 8, payment has not been received for the services rendered to Gomez Co. thereby increasing the accounts receivable account by $5,668.

On November 18, payment for the services rendered to IFM Corporation worth $2,208 has been received thereby reducing accounts receivables (asset) by $2,208. However, another asset (Cash) is increased by $2,208.

On November 22, Cash is paid on general administrative expense. Miscellaneous expenses are an expense and increase in expense is debited.

On November 24, payment has not been received for the services rendered to Alex’s Engineering Co. thereby increasing the accounts receivable account by $3,950.

No entry is needed for the transaction on November 25^t^h regarding the bill sent to IFM for the past payment of $3,000 due as this is just a reminder to make the payment.

On November 28, amount is reimbursed for mileage. Mileage is an expense and increase in expense is debited.

On November 30, wages were paid. Wages is an expense and increase in expense is debited.

On November 30, Cash is withdrawn for personal use. Increase in withdrawal decreases cash. As such Drawing account is debited.

Requirement 2:

To determine

To Determine:

Ledger Accounts to post the above Journal Entries

Requirement 2:

Expert Solution

Explanation of Solution

Explanation:

The journal entries mentioned above can be summarized using balance column format. Following are the different general ledger accounts:

Cash

Date (2015)	PR	Debit	Credit	Balance
Oct.1		45,000		45,000
Oct.2			3,300	41,700
Oct.5			2,220	39,480
Oct.8			1,420	38,060
Oct.15		4,800		42,860
Oct.17			805	42,055
Oct.20			1,728	40,327
Oct.22		1,400		41,727
Oct.31			875	40,852
Oct.31			3,600	37,252
Nov.1			320	36,932
Nov.2		4,633		41,565
Nov.5			1,125	40,440
Nov.18		2,208		42,648
Nov.22			250	42,398
Nov.28			384	42,014
Nov.30			1,750	40,264
Nov.30			2,000	38,264

Accounts Receivable

Date (2015)	PR	Debit	Credit	Balance
Oct.6		4,800		4,800
Oct.12		1,400		6,200
Oct.15			4,800	1,400
Oct.22			1,400	0
Oct.28		5,208		5,208
Nov.8		5,668		10,876
Nov.18			2,208	8,668
Nov.24		3,950		12,618

Computer Supplies

Date (2015)	PR	Debit	Credit	Balance
Oct.3		1,420		1,420
Nov.5		1,125		2,545

Prepaid Insurance

Date (2015)	PR	Debit	Credit	Balance
Oct.3		2,220		2,220

Prepaid Rent

Date (2015)	PR	Debit	Credit	Balance
Oct.2		3,300		3,300

Office Equipment

Date (2015)	PR	Debit	Credit	Balance
Oct.1		8,000		8,000

Computer Equipment

Date (2015)	PR	Debit	Credit	Balance
Oct.1		20,000		20,000

Accounts Payable

Date (2015)	PR	Debit	Credit	Balance
Oct.3			1,420	1,420
Oct.8		1,420		0

Capital

Date (2015)	PR	Debit	Credit	Balance
Oct.1			73,000	73,000

Drawings

Date (2015)	PR	Debit	Credit	Balance
Oct.31		3,600		3,600
Nov.30		2,000		5,600

Computer Services Revenue

Date (2015)	PR	Debit	Credit	Balance
Oct.6			4,800	4,800
Oct.12			1,400	6,200
Oct.28			5,208	11,408
Nov.2			4,633	16,041
Nov.28			5,668	21,709
Nov.24			3,950	25,659

Wages Expense

Date (2015)	PR	Debit	Credit	Balance
Oct.31		875		875
Nov.30		1,750		2,625

Advertising Expense

Date (2015)	PR	Debit	Credit	Balance
Oct.20		1,728		1,728

Mileage Expense

Date (2015)	PR	Debit	Credit	Balance
Nov.1		320		320
Nov.28		384		704

Miscellaneous Expenses

Date (2015)	PR	Debit	Credit	Balance
Nov.22		250		250

Repairs Expenses

Date (2015)	PR	Debit	Credit	Balance
Oct.17		805		805

Requirement 3:

To determine

To Determine:

Trial Balance

Requirement 3:

Expert Solution

Explanation of Solution

Explanation:

Business Solutions

Trial Balance

At November 30, 2015

Particulars	Debit ($)	Credit ($)
Cash	38,264
Supplies	2,545
Equipment	8,000
Account Receivables	12,618
Prepaid Rent	3,300
Prepaid Insurance	2,220
Computer Equipment	20,000
Accounts Payable		0
Capital		73,000
Drawings	5,600
Wage Expenses	2,625
Advertisement	1,728
Mileage Expense	704
Misc. Expenses	250
Repair	805
Service Revenue		25,659
Total	98,659	98,659

Answer 6

Chapter 2, Problem 2SP

To determine

Introduction:

Expenses refer to cash outflows incurred during the course of the business and possesses debit balance. On the other hand, income or revenues refer to the returns and possess credit balance according to the principles and laws of accounting. In addition, an asset always has a debit balance because assets are owned by the business. On the other hand, liabilities possess credit balance because it creates an obligation of debt for the business.

Requirement 1:

To Determine:

Journal Entries for the transactions of Business Solutions

Expert Solution

Answer to Problem 2SP

Solution:

Date	Particulars	Debit Amount	Credit Amount
01.10.2015	Cash	45,000
	Office Equipment	8,000
	Computer Equipment	20,000
	Capital		73,000
	(Owner invests cash and equipment as capital)
02.10.2015	Prepaid Rent	3,300
	Cash		3,300
	(Paid for months’ rent in advance)
03.10.2015	Computer Supplies	1,420
	Accounts Payable		1,420
	(purchased supplies on credit)
05.10.2015	Prepaid Insurance	2,220
	Cash		2,220
	(Paid 12 months’ premium in advance)
06.10.2015	Accounts Receivable	4,800
	Computer Services Revenue		4,800
	(Billed customer for services)
08.10.2015	Accounts Payable	1,420
	Cash		1,420
	(Paid balance due on accounts payable)
12.10.2015	Accounts Receivable	1,400
	Computer Service Revenue		1,400
	(Billed customer for services)
15.10.2015	Cash	4,800
	Accounts Receivable		4,800
	(Collected accounts receivable)
17.10.2015	Repairs Expense − Computer	805
	Cash		805
	(Paid for computer repairs)
20.102015	Advertising Expense	1,728
	Cash		1,728
	(Purchased ads in local newspaper)
22.10.2015	Cash	1,400
	Accounts Receivable		1,400
	(Collected Accounts Receivable)
28.10.2015	Accounts Receivable	5,208
	Computer Service Revenue		5,208
	(Billed customer for services)
31.10.2015	Wages Expense	875
	Cash		875
	(Paid employee for part time work)
31.10.2015	Drawing	3,600
	Cash		3,600
	(Withdrew cash for personal use)
01.11.2015	Mileage Expense	320
	Cash		320
	(Reimbursed R for mileage)
02.11.2015	Cash	4,633
	Computer Service Revenue		4,633
	(Collected cash revenue from client)
05.11.2015	Computer Supplies	1,125
	Cash		1,125
	(Purchased computer supplies for cash)
08.11.2015	Accounts Receivable	5,668
	Computer Service Revenue		5,668
	(Billed customer for services)
18.11.2015	Cash	2,208
	Accounts Receivable		2,208
	(Collected Accounts Receivable)
22.11.2015	Miscellaneous Expenses	250
	Cash		250
	(Record donation)
24.11.2015	Accounts Receivable	3,950
	Computer Service Revenue		3,950
	(Billed customer for services)
28.11.2015	Mileage Expense	384
	Cash		384
	(Reimbursed R for mileage)
30.11.2015	Wages Expense	1,750
	Cash		1,750
	(Paid employee for part time work)
30.11.2015	Drawing	2,000
	Cash		2,000
	(Withdrew Cash for personal use)

Explanation of Solution

Explanations:

On October 1, increase in asset is debited. As Santana Rey is raising equity by means of contributing cash and equipment, the asset of the company increases. Increase in equity is credited.

On October 2, rent for four months has been paid in advance. Prepaid Rent is an asset as it is an expense that has not expired as on the date when the books were prepared. Increase in current asset is debited.

On October 3, computer supplies were purchased on credit. Computer Supplies are an asset to the company and an increase in asset is debited. It has been purchased on account thereby increasing the liability. Increase in liability is credited.

On October 5, Insurance Premium is paid in advance. Prepaid Insurance is an asset as it is an expense that has not expired as on the date when the books were prepared. Increase in current asset is debited.

On October 6, services were paid but fees have not been received so far. As such, money would be collected later. Receivables account will be created that is debited as it is a current asset.

On October 8,

payment is made for the computer supplies that were acquired on credit. Since the liability is decreased, accounts payable account is debited.

On October 12, services were paid but fees have not been received so far. As such, money would be collected later. Receivables account will be created that is debited as it is a current asset.

On October 15, payment for the services rendered to Easy Leasing worth $4,800 has been received thereby reducing accounts receivables (asset) by $4,800. However, another asset (Cash) is increased by $4,800.

On October 17, amount is paid for repairing computers. Repairs are an expense and increase in expense is debited.

On October 20, advertisement in local newspaper is purchased. Advertising is an expense and increase in expense is debited.

On October 22, payment for the services rendered to Easy Leasing worth $1,400 has been received thereby reducing accounts receivables (asset) by $1,400. However, another asset (Cash) is increased by $1,400.

On October 28, payment has not been received for the services rendered to IFM company thereby increasing the accounts receivable account by $5,208.

On October 31, amount is paid for wages. Wages is an expense and increase in expense is debited.

On October 31, Cash is withdrawn for personal use. Increase in withdrawal decreases cash. As such Drawing account is debited.

On November 1, amount is reimbursed for mileage. Mileage is an expense and increase in expense is debited.

On November 2, payment for the services rendered to L Corporation worth $4,633 has been received thereby reducing accounts receivables (asset) by $4,633. However, another asset (Cash) is increased by $4,633.

On November 5, computer supplies are purchased for cash.

On November 8, payment has not been received for the services rendered to Gomez Co. thereby increasing the accounts receivable account by $5,668.

On November 18, payment for the services rendered to IFM Corporation worth $2,208 has been received thereby reducing accounts receivables (asset) by $2,208. However, another asset (Cash) is increased by $2,208.

On November 22, Cash is paid on general administrative expense. Miscellaneous expenses are an expense and increase in expense is debited.

On November 24, payment has not been received for the services rendered to Alex’s Engineering Co. thereby increasing the accounts receivable account by $3,950.

No entry is needed for the transaction on November 25^t^h regarding the bill sent to IFM for the past payment of $3,000 due as this is just a reminder to make the payment.

On November 28, amount is reimbursed for mileage. Mileage is an expense and increase in expense is debited.

On November 30, wages were paid. Wages is an expense and increase in expense is debited.

On November 30, Cash is withdrawn for personal use. Increase in withdrawal decreases cash. As such Drawing account is debited.

Answer 7

Chapter 2, Problem 2SP

To determine

Introduction:

Expenses refer to cash outflows incurred during the course of the business and possesses debit balance. On the other hand, income or revenues refer to the returns and possess credit balance according to the principles and laws of accounting. In addition, an asset always has a debit balance because assets are owned by the business. On the other hand, liabilities possess credit balance because it creates an obligation of debt for the business.

Requirement 1:

To Determine:

Journal Entries for the transactions of Business Solutions

Answer 8

Expert Solution

Answer to Problem 2SP

Solution:

Date	Particulars	Debit Amount	Credit Amount
01.10.2015	Cash	45,000
	Office Equipment	8,000
	Computer Equipment	20,000
	Capital		73,000
	(Owner invests cash and equipment as capital)
02.10.2015	Prepaid Rent	3,300
	Cash		3,300
	(Paid for months’ rent in advance)
03.10.2015	Computer Supplies	1,420
	Accounts Payable		1,420
	(purchased supplies on credit)
05.10.2015	Prepaid Insurance	2,220
	Cash		2,220
	(Paid 12 months’ premium in advance)
06.10.2015	Accounts Receivable	4,800
	Computer Services Revenue		4,800
	(Billed customer for services)
08.10.2015	Accounts Payable	1,420
	Cash		1,420
	(Paid balance due on accounts payable)
12.10.2015	Accounts Receivable	1,400
	Computer Service Revenue		1,400
	(Billed customer for services)
15.10.2015	Cash	4,800
	Accounts Receivable		4,800
	(Collected accounts receivable)
17.10.2015	Repairs Expense − Computer	805
	Cash		805
	(Paid for computer repairs)
20.102015	Advertising Expense	1,728
	Cash		1,728
	(Purchased ads in local newspaper)
22.10.2015	Cash	1,400
	Accounts Receivable		1,400
	(Collected Accounts Receivable)
28.10.2015	Accounts Receivable	5,208
	Computer Service Revenue		5,208
	(Billed customer for services)
31.10.2015	Wages Expense	875
	Cash		875
	(Paid employee for part time work)
31.10.2015	Drawing	3,600
	Cash		3,600
	(Withdrew cash for personal use)
01.11.2015	Mileage Expense	320
	Cash		320
	(Reimbursed R for mileage)
02.11.2015	Cash	4,633
	Computer Service Revenue		4,633
	(Collected cash revenue from client)
05.11.2015	Computer Supplies	1,125
	Cash		1,125
	(Purchased computer supplies for cash)
08.11.2015	Accounts Receivable	5,668
	Computer Service Revenue		5,668
	(Billed customer for services)
18.11.2015	Cash	2,208
	Accounts Receivable		2,208
	(Collected Accounts Receivable)
22.11.2015	Miscellaneous Expenses	250
	Cash		250
	(Record donation)
24.11.2015	Accounts Receivable	3,950
	Computer Service Revenue		3,950
	(Billed customer for services)
28.11.2015	Mileage Expense	384
	Cash		384
	(Reimbursed R for mileage)
30.11.2015	Wages Expense	1,750
	Cash		1,750
	(Paid employee for part time work)
30.11.2015	Drawing	2,000
	Cash		2,000
	(Withdrew Cash for personal use)

Answer 9

Expert Solution

Answer 10

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

Explanations:

On October 1, increase in asset is debited. As Santana Rey is raising equity by means of contributing cash and equipment, the asset of the company increases. Increase in equity is credited.

On October 2, rent for four months has been paid in advance. Prepaid Rent is an asset as it is an expense that has not expired as on the date when the books were prepared. Increase in current asset is debited.

On October 3, computer supplies were purchased on credit. Computer Supplies are an asset to the company and an increase in asset is debited. It has been purchased on account thereby increasing the liability. Increase in liability is credited.

On October 5, Insurance Premium is paid in advance. Prepaid Insurance is an asset as it is an expense that has not expired as on the date when the books were prepared. Increase in current asset is debited.

On October 6, services were paid but fees have not been received so far. As such, money would be collected later. Receivables account will be created that is debited as it is a current asset.

On October 8,

payment is made for the computer supplies that were acquired on credit. Since the liability is decreased, accounts payable account is debited.

On October 12, services were paid but fees have not been received so far. As such, money would be collected later. Receivables account will be created that is debited as it is a current asset.

On October 15, payment for the services rendered to Easy Leasing worth $4,800 has been received thereby reducing accounts receivables (asset) by $4,800. However, another asset (Cash) is increased by $4,800.

On October 17, amount is paid for repairing computers. Repairs are an expense and increase in expense is debited.

On October 20, advertisement in local newspaper is purchased. Advertising is an expense and increase in expense is debited.

On October 22, payment for the services rendered to Easy Leasing worth $1,400 has been received thereby reducing accounts receivables (asset) by $1,400. However, another asset (Cash) is increased by $1,400.

On October 28, payment has not been received for the services rendered to IFM company thereby increasing the accounts receivable account by $5,208.

On October 31, amount is paid for wages. Wages is an expense and increase in expense is debited.

On October 31, Cash is withdrawn for personal use. Increase in withdrawal decreases cash. As such Drawing account is debited.

On November 1, amount is reimbursed for mileage. Mileage is an expense and increase in expense is debited.

On November 2, payment for the services rendered to L Corporation worth $4,633 has been received thereby reducing accounts receivables (asset) by $4,633. However, another asset (Cash) is increased by $4,633.

On November 5, computer supplies are purchased for cash.

On November 8, payment has not been received for the services rendered to Gomez Co. thereby increasing the accounts receivable account by $5,668.

On November 18, payment for the services rendered to IFM Corporation worth $2,208 has been received thereby reducing accounts receivables (asset) by $2,208. However, another asset (Cash) is increased by $2,208.

On November 22, Cash is paid on general administrative expense. Miscellaneous expenses are an expense and increase in expense is debited.

On November 24, payment has not been received for the services rendered to Alex’s Engineering Co. thereby increasing the accounts receivable account by $3,950.

No entry is needed for the transaction on November 25^t^h regarding the bill sent to IFM for the past payment of $3,000 due as this is just a reminder to make the payment.

On November 28, amount is reimbursed for mileage. Mileage is an expense and increase in expense is debited.

On November 30, wages were paid. Wages is an expense and increase in expense is debited.

On November 30, Cash is withdrawn for personal use. Increase in withdrawal decreases cash. As such Drawing account is debited.

Answer 13

Requirement 2:

To determine

To Determine:

Ledger Accounts to post the above Journal Entries

Requirement 2:

Expert Solution

Explanation of Solution

Explanation:

The journal entries mentioned above can be summarized using balance column format. Following are the different general ledger accounts:

Cash

Date (2015)	PR	Debit	Credit	Balance
Oct.1		45,000		45,000
Oct.2			3,300	41,700
Oct.5			2,220	39,480
Oct.8			1,420	38,060
Oct.15		4,800		42,860
Oct.17			805	42,055
Oct.20			1,728	40,327
Oct.22		1,400		41,727
Oct.31			875	40,852
Oct.31			3,600	37,252
Nov.1			320	36,932
Nov.2		4,633		41,565
Nov.5			1,125	40,440
Nov.18		2,208		42,648
Nov.22			250	42,398
Nov.28			384	42,014
Nov.30			1,750	40,264
Nov.30			2,000	38,264

Accounts Receivable

Date (2015)	PR	Debit	Credit	Balance
Oct.6		4,800		4,800
Oct.12		1,400		6,200
Oct.15			4,800	1,400
Oct.22			1,400	0
Oct.28		5,208		5,208
Nov.8		5,668		10,876
Nov.18			2,208	8,668
Nov.24		3,950		12,618

Computer Supplies

Date (2015)	PR	Debit	Credit	Balance
Oct.3		1,420		1,420
Nov.5		1,125		2,545

Prepaid Insurance

Date (2015)	PR	Debit	Credit	Balance
Oct.3		2,220		2,220

Prepaid Rent

Date (2015)	PR	Debit	Credit	Balance
Oct.2		3,300		3,300

Office Equipment

Date (2015)	PR	Debit	Credit	Balance
Oct.1		8,000		8,000

Computer Equipment

Date (2015)	PR	Debit	Credit	Balance
Oct.1		20,000		20,000

Accounts Payable

Date (2015)	PR	Debit	Credit	Balance
Oct.3			1,420	1,420
Oct.8		1,420		0

Capital

Date (2015)	PR	Debit	Credit	Balance
Oct.1			73,000	73,000

Drawings

Date (2015)	PR	Debit	Credit	Balance
Oct.31		3,600		3,600
Nov.30		2,000		5,600

Computer Services Revenue

Date (2015)	PR	Debit	Credit	Balance
Oct.6			4,800	4,800
Oct.12			1,400	6,200
Oct.28			5,208	11,408
Nov.2			4,633	16,041
Nov.28			5,668	21,709
Nov.24			3,950	25,659

Wages Expense

Date (2015)	PR	Debit	Credit	Balance
Oct.31		875		875
Nov.30		1,750		2,625

Advertising Expense

Date (2015)	PR	Debit	Credit	Balance
Oct.20		1,728		1,728

Mileage Expense

Date (2015)	PR	Debit	Credit	Balance
Nov.1		320		320
Nov.28		384		704

Miscellaneous Expenses

Date (2015)	PR	Debit	Credit	Balance
Nov.22		250		250

Repairs Expenses

Date (2015)	PR	Debit	Credit	Balance
Oct.17		805		805

Answer 14

Requirement 2:

To determine

To Determine:

Ledger Accounts to post the above Journal Entries

Answer 15

Requirement 2:

Expert Solution

Explanation of Solution

Explanation:

The journal entries mentioned above can be summarized using balance column format. Following are the different general ledger accounts:

Cash

Date (2015)	PR	Debit	Credit	Balance
Oct.1		45,000		45,000
Oct.2			3,300	41,700
Oct.5			2,220	39,480
Oct.8			1,420	38,060
Oct.15		4,800		42,860
Oct.17			805	42,055
Oct.20			1,728	40,327
Oct.22		1,400		41,727
Oct.31			875	40,852
Oct.31			3,600	37,252
Nov.1			320	36,932
Nov.2		4,633		41,565
Nov.5			1,125	40,440
Nov.18		2,208		42,648
Nov.22			250	42,398
Nov.28			384	42,014
Nov.30			1,750	40,264
Nov.30			2,000	38,264

Accounts Receivable

Date (2015)	PR	Debit	Credit	Balance
Oct.6		4,800		4,800
Oct.12		1,400		6,200
Oct.15			4,800	1,400
Oct.22			1,400	0
Oct.28		5,208		5,208
Nov.8		5,668		10,876
Nov.18			2,208	8,668
Nov.24		3,950		12,618

Computer Supplies

Date (2015)	PR	Debit	Credit	Balance
Oct.3		1,420		1,420
Nov.5		1,125		2,545

Prepaid Insurance

Date (2015)	PR	Debit	Credit	Balance
Oct.3		2,220		2,220

Prepaid Rent

Date (2015)	PR	Debit	Credit	Balance
Oct.2		3,300		3,300

Office Equipment

Date (2015)	PR	Debit	Credit	Balance
Oct.1		8,000		8,000

Computer Equipment

Date (2015)	PR	Debit	Credit	Balance
Oct.1		20,000		20,000

Accounts Payable

Date (2015)	PR	Debit	Credit	Balance
Oct.3			1,420	1,420
Oct.8		1,420		0

Capital

Date (2015)	PR	Debit	Credit	Balance
Oct.1			73,000	73,000

Drawings

Date (2015)	PR	Debit	Credit	Balance
Oct.31		3,600		3,600
Nov.30		2,000		5,600

Computer Services Revenue

Date (2015)	PR	Debit	Credit	Balance
Oct.6			4,800	4,800
Oct.12			1,400	6,200
Oct.28			5,208	11,408
Nov.2			4,633	16,041
Nov.28			5,668	21,709
Nov.24			3,950	25,659

Wages Expense

Date (2015)	PR	Debit	Credit	Balance
Oct.31		875		875
Nov.30		1,750		2,625

Advertising Expense

Date (2015)	PR	Debit	Credit	Balance
Oct.20		1,728		1,728

Mileage Expense

Date (2015)	PR	Debit	Credit	Balance
Nov.1		320		320
Nov.28		384		704

Miscellaneous Expenses

Date (2015)	PR	Debit	Credit	Balance
Nov.22		250		250

Repairs Expenses

Date (2015)	PR	Debit	Credit	Balance
Oct.17		805		805

Answer 16

Requirement 2:

Expert Solution

Answer 17

Requirement 2:

Expert Solution

Answer 18

Expert Solution

Answer 19

Requirement 3:

To determine

To Determine:

Trial Balance

Requirement 3:

Expert Solution

Explanation of Solution

Explanation:

Business Solutions

Trial Balance

At November 30, 2015

Particulars	Debit ($)	Credit ($)
Cash	38,264
Supplies	2,545
Equipment	8,000
Account Receivables	12,618
Prepaid Rent	3,300
Prepaid Insurance	2,220
Computer Equipment	20,000
Accounts Payable		0
Capital		73,000
Drawings	5,600
Wage Expenses	2,625
Advertisement	1,728
Mileage Expense	704
Misc. Expenses	250
Repair	805
Service Revenue		25,659
Total	98,659	98,659

Answer 20

Requirement 3:

To determine

To Determine:

Trial Balance

Answer 21

Requirement 3:

Expert Solution

Explanation of Solution

Explanation:

Business Solutions

Trial Balance

At November 30, 2015

Particulars	Debit ($)	Credit ($)
Cash	38,264
Supplies	2,545
Equipment	8,000
Account Receivables	12,618
Prepaid Rent	3,300
Prepaid Insurance	2,220
Computer Equipment	20,000
Accounts Payable		0
Capital		73,000
Drawings	5,600
Wage Expenses	2,625
Advertisement	1,728
Mileage Expense	704
Misc. Expenses	250
Repair	805
Service Revenue		25,659
Total	98,659	98,659