Adria Lopez_JOURNAL TO FINANCIAL STATEMENTS
Adria Lopez created Success Systems on October 1, 2013. The company has been successful, and its list of customers has grown. To accommodate the growth, the accounting system is modified to set up separate accounts for each customer. The following chart of accounts includes the account number used for each account and any balance as of December 31, 2013. Adria Lopez decided to add a fourth digit with a decimal point to the 106 account number that had been used for the single Accounts Receivable account. This change allows the company to continue using the existing chart of accounts.
No. | Account Title | Debit | Credit | ||
101 | Cash | $ | 48,502 | ||
106.1 | Alex’s Engineering Co. | 0 | |||
106.2 | Wildcat Services | 0 | |||
106.3 | Easy Leasing | 0 | |||
106.4 | IFM Co. | 3,080 | |||
106.5 | Liu Corp. | 0 | |||
106.6 | Gomez Co. | 2,748 | |||
106.7 | Delta Co. | 0 | |||
106.8 | KC, Inc. | 0 | |||
106.9 | Dream, Inc. | 0 | |||
119 | Merchandise inventory | 0 | |||
126 | Computer supplies | 620 | |||
128 | Prepaid insurance | 1,935 | |||
131 | Prepaid rent | 915 | |||
163 | Office equipment | 8,090 | |||
164 | Accumulated depreciation—Office equipment | $ | 280 | ||
167 | Computer equipment | 20,100 | |||
168 | Accumulated depreciation—Computer equipment | 1,220 | |||
201 | Accounts payable | 1,210 | |||
210 | Wages payable | $ | 700 | ||
236 | Unearned computer services revenue | 1,380 | |||
307 | Common stock | 68,000 | |||
318 | Retained earnings | 13,200 | |||
319 | Dividends | $ | 0 | ||
403 | Computer services revenue | 0 | |||
413 | Sales | 0 | |||
414 | Sales returns and allowances | 0 | |||
415 | Sales discounts | 0 | |||
502 | Cost of goods sold | 0 | |||
612 | Depreciation expense—Office equipment | 0 | |||
613 | Depreciation expense—Computer equipment | 0 | |||
623 | Wages expense | 0 | |||
637 | Insurance expense | 0 | |||
640 | Rent expense | 0 | |||
652 | Computer supplies expense | 0 | |||
655 | Advertising expense | 0 | |||
676 | Mileage expense | 0 | |||
677 | Miscellaneous expenses | 0 | |||
684 | Repairs expense—Computer | 0 | |||
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In response to requests from customers, A. Lopez will begin selling computer software. The company will extend credit terms of 1/10, n/30, FOB shipping point, to all customers who purchase this merchandise. However, no cash discount is available on consulting fees. Additional accounts (Nos. 119, 413, 414, 415, and 502) are added to its general ledger to accommodate the company’s new merchandising activities. Also, Success Systems does not use reversing entries and, therefore, all revenue and expense accounts have zero beginning balances as of January 1, 2014. Its transactions for January through March follow:
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The following additional facts are available for preparing adjustments on March 31 prior to financial statement preparation: |
a. | The March 31 amount of computer supplies still available totals $2,015. |
b. | Three more months have expired since the company purchased its annual insurance policy at a $2,580 cost for 12 months of coverage. |
c. | Lyn Addie has not been paid for seven days of work at the rate of $175 per day. |
d. | Three months have passed since any prepaid rent has been transferred to expense. The monthly rent expense is $915. |
e. | Depreciation on the computer equipment for January 1 through March 31 is $1,220. |
f. | Depreciation on the office equipment for January 1 through March 31 is $280. |
g. | The March 31 amount of merchandise inventory still available totals $624. |
Question one is “Prepare journal entries to record each of the January through March transactions.”
Question two is “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 December 31, 2013.)”
question three is Prepare a partial work sheet consisting of the first six columns that includes the unadjusted trial balance, the March 31 adjustments (a) through (g), and the adjusted trial balance.
question four is Prepare an income statement (from the adjusted trial balance in part 3) for the three months ended March 31, 2014. Use a single-step format.
List all expenses without differentiating between selling expenses and general and administrative expenses.
question five is Prepare a statement of retained earnings (from the adjusted trial balance in part 3) for the three months ended March 31, 2014.
question six is Prepare a classified balance sheet (from the adjusted trial balance) as of March 31, 2014
