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Term Problem_Adriana Lopez_Journal, Ledger and Trial Balance




Question;Term Problem On October 1, 2014, Adriana Lopez launched a computer servicescompany called Success Systems, which provides consulting services, computer systemsinstallations, and custom program development. Lopez adopts the calendar year forreporting purposes and prepared the company?s first set of financial statements onDecember 31, 2014. The company has been successful, and its list of customers hasgrown. To accommodate the growth, the accounting system is modified to set upseparate accounts for each customer. The following chart of accounts includes theaccount number used for each account and any balance as of December 31, 2014. Lopezdecided to add a fourth digit with a decimal point to the 106 account number that hadbeen used for the single Accounts Receivable account. This modification allows thecompany to continue using the existing chart of accounts.CashAccounts Receivable - ABC Service Corp.Accounts Receivable - Bobcat Co.Accounts Receivable - Colburt Co.Accounts Receivable - Delta Corp.Accounts Receivable - Energy Co.Accounts Receivable - Five Bros, Inc.Accounts Receivable - Good Times, IncAccounts Receivable - Hard LeasingAccounts Receivable - Inventory, Inc.Merchandise InventoryComputer SuppliesPrepaid InsurancePrepaid RentOffice EquipmentAccumulated Depreciation - Office EquipmentComputer EquipmentAccumulated Depreciation - Computer EquipmentAccounts PayableWages PayableUnearned Computer Services Revenue 1,550 950 6,000 1,575$ 56,000$ 400 26,600Debit Credit101106.1106.2106.3126128131163164106.4106.5106.6106.7106.8106.9Acct.236167168201210No.119SUCCESS SYSTEMSTrial BalanceJanuary 1, 2015 4,200 2,350 11,500 3,500 11,200 2,500A. Lopez, CapitalA. Lopez, WithdrawalsComputer Services RevenueSalesSales Returns and AllowancesSales DiscountsCost of Goods SoldDepreciation Expense - Office EquipmentDepreciation Expense - Computer EquipmentWages ExpenseInsurance ExpenseRent ExpenseComputer Supplies ExpenseAdvertising ExpenseMileage ExpenseMiscellaneous ExpenseRepairs Expense - ComputerTotalsIn response to requests from customers, Lopez will begin selling computer software.The company will extend credit terms of 1/20, n/30, FOB shipping point, to allcustomers who purchase this merchandise. However, no cash discount is available onconsulting fees. Success Systems does not use reversing entries and, therefore, allrevenue and expense accounts have zero balances as of January 1, 2015. Itstransactions for January through March follow:Jan Paid cash to Lisa Wu for fourteen days? work at the rate of per day.Nine of the fourteen days relate to wages payable that were accrued in theprior year.Sold merchandise with a retail value of and a cost of toABC Service Corp., invoice dated January 10.Received cash from Inventory, Inc. as full payment on its account.Purchased of merchandise from Nevada Corp. with terms of 1/15,n/30, FOB shipping point, invoice dated January 11.$ 10,000 $ 7,50011 $ 6,8007 $1751010 $ 3,500Trial Balance (Continued) 107,375CreditAcct.637No.301403302413414652655676677684415502612613623640January 1, 2015SUCCESS SYSTEMSDebit$ 117,850 $ 117,850Adriana Lopez invested an additional cash in the business.Paid cash for freight charges on the merchandise purchased onJanuary 11.Paid cash to Big Mall for another three months? rent in advance.Adriana Lopez withdrew cash for personal use.Paid Nevada Corp. for the invoice dated January 11, net of the discount.ABC Service Corp. returned of defective merchandise from its invoicedated January 10. The returned merchandise, which had a cost, isdiscarded. (The policy of Success Systems is to leave the cost of defectiveproducts in cost of goods sold.)Completed a five-day project for Bobcat Co. and billed it which isthe total price of less the advance payment of.Feb Purchased of computer supplies from Cain Office Products oncredit, invoice dated March 8.Received the balance due from ABC Service Corp., net of both the discountand the credit for the returned merchandise.Paid cash to Lisa Wu for 17 days? work at per day.Reimbursed Adriana Lopez for business automobile mileage (miles atper mile).Paid cash to the local newspaper for an advertising insert in today?spaper.Mar Paid cash to Lisa Wu for 18 days? work at per day.Paid the full amount due to Cain Office Products, including amounts created onDecember 28 (of) and February 1.Paid cash for minor repairs to the company?s computer.Received the balance due from Bobcat Co. for fees billed on January 27.Sold merchandise for with a cost of on credit to DeltaCorp., invoice dated March 25.Billed Five Bros, Inc. for of computing services provided.Reimbursed Adriana Lopez for business automobile mileage (miles atper mile).The following additional facts are available for preparing adjustments on March 31prior to financial statement preparation:a. The March 31 amount of merchandise inventory still available totals.b. Wu has not been paid for 23 days of work at the rate of per day.c. Three more months have expired since the company purchased its annualinsurance policy at a cost for 12 months of coverage.$ 1,550$175$ 5,000$ 8,000$ 4,800 $ 3,600$1,8001 $ 1,7501125$ 11,0002525 $90027$ 0.5614 $ 325171812$ 7,50015$ 375$1751514$0.56$ 8,40025 $ 14,000$ 7,500311617750$ 175$720$ 6,000825$ 4,000d. Depreciation on the computer equipment for January 1 through March 31 is.e. Depreciation on the office equipment for January 1 through March 31 is.f. The March 31 amount of computer supplies still available totals.g. Three months have passed since any prepaid rent has been transferred to expense.The monthly rent expense is.Required1. Prepare journal entries to record each of the January through March transactions.2. Post the journal entries in part 1 to the accounts in the company?s general ledger.(Note: Begin with the ledger?s post-closing adjusted balances as of January 1,2013.)3. Prepare a partial work sheet consisting of the first six columns (similar to the oneshown in Exhibit 5B.1 on page 205.) that includes the unadjusted trial balance, theMarch 31 adjustments (a) through (g), and the adjusted trial balance. Journalize theadjustments, and post them to the ledger.4. Prepare an income statement (from the adjusted trial balance in part 3) for the threemonths ended March 31, 2013. Use the multi-step format. List all expenses withoutdifferentiating between selling expenses and general and administrative expenses.See the example on page 193, Exhibit 5.13.5. Prepare a statement of owner?s equity (from the adjusted trial balance in part 3) forthe three months ended March 31, 2013. See the example on page 141, Exhibit 4.2.6. Prepare a classified balance sheet (from the adjusted trial balance) as of March 31,2013. See the example on page 148, Exhibit 4.9.CheckUnadjusted Trial Balance Totals - $ 152,525 Adjusted Trail Balance Totals - $ 157,900Cash ending balance - $ 40,020


Paper#39723 | Written in 18-Jul-2015

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