Paid Share of Mall Advertising Costs

Part 1

Journal entries:

Dec.2Advertising Expense...... 655 1,025

Cash...... 101 1,025

Paid share of mall advertising costs.

3Repairs Expense—Computer...... 684 500

Cash...... 101 500

Repaired the computer.

4Cash...... 101 3,950

Accounts Receivable...... 106 3,950

Collected accounts receivable.

10Wages Expense...... 623 750

Cash...... 101 750

Paid employee for part-time work.

14Cash...... 101 1,500

Unearned Computer Services Revenue...236 1,500

Received advance on work to be performed.

15Computer Supplies...... 126 1,100

Accounts Payable...... 201 1,100

Purchased supplies on credit.

16No entry recorded in the journal.

20Cash...... 101 5,625

Computer Services Revenue...... 403 5,625

Collected cash revenue from customer.

28Cash...... 101 3,000

Accounts Receivable...... 106 3,000

Collected accounts receivable.

29Mileage Expense...... 676 192

Cash...... 101 192

Reimbursed Breeze for mileage.

31K. Breeze, Withdrawals...... 302 1,500

Cash...... 101 1,500

Owner withdraws cash.

Part 2

Adjusting entries:

Dec. 31Computer Supplies Expense ...... 652 3,065

Computer Supplies ...... 126 3,065

Adjustment for supplies used (supplies balance less cost of supplies available).

31Insurance Expense ...... 637 555

Prepaid Insurance ...... 128 555

Adjustment for expired insurance (1/4 of original prepaid amount).

31Wages Expense ...... 623 500

Wages Payable ...... 210 500

Adjustment for accrued wages.

31Depreciation Exp—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

31Depreciation Expense—Office Equip...... 612 400

Accumulated Depreciation—
Office Equipment ...... 164 400

Adjustment for office equipment depreciation:

Cost...... $8,000

Predicted life...... 5 years

Annual depreciation (cost/life)...... $1,600

Expense for three months...... $400

31Rent Expense ...... 640 2,475

Prepaid Rent ...... 131 2,475

Adjustment for expired rent (3/4 of original prepaid amount).

Parts 1 and 2

Posting to the accounts:

Parts 1 and 2

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 / 0
28 / 5,208 / 5,208
Nov. / 8 / 5,668 / 10,876
18 / 2,208 / 8,668
24 / 3,950 / 12,618
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
Office Equipment / Acct. No. 163
Date / Explanation / PR / Debit / Credit / Balance
Oct. / 1 / 8,000 / 8,000
Accumulated Depreciation—Office Equipment / Acct. No. 164
Date / Explanation / PR / Debit / Credit / Balance
Dec. / 31 / 400 / 400

Parts 1 and 2

Computer Equipment / Acct. No. 167
Date / Explanation / PR / Debit / Credit / Balance
Oct. / 1 / 20,000 / 20,000
Accumulated Depreciation—Computer Equipment / Acct. No. 168
Date / Explanation / PR / Debit / Credit / Balance
Dec. / 31 / 1,250 / 1,250
Accounts Payable / Acct. No. 201
Date / Explanation / PR / Debit / Credit / Balance
Oct. / 3 / 1,420 / 1,420
8 / 1,420 / 0
Dec. / 15 / 1,100 / 1,100
Wages Payable / Acct. No. 210
Date / Explanation / PR / Debit / Credit / Balance
Dec. / 31 / 500 / 500
Unearned Computer Services Revenue / Acct. No. 236
Date / Explanation / PR / Debit / Credit / Balance
Dec. / 14 / 1,500 / 1,500
K. Breeze, Capital / Acct. No. 301
Date / Explanation / PR / Debit / Credit / Balance
Oct. / 1 / 83,000 / 83,000
K. Breeze, Withdrawals / Acct. No. 302
Date / Explanation / PR / Debit / Credit / Balance
Oct. / 31 / 3,600 / 3,600
Nov. / 30 / 2,000 / 5,600
Dec. / 31 / 1,500 / 7,100

Parts 1 and 2

Computer Services Revenue / Acct. No. 403
Date / Explanation / PR / Debit / Credit / Balance
Oct. / 6 / 4,800 / 4,800
12 / 1,400 / 6,200
28 / 5,208 / 11,408
Nov. / 2 / 4,633 / 16,041
8 / 5,668 / 21,709
24 / 3,950 / 25,659
Dec. / 20 / 5,625 / 31,284
Depreciation Expense—Office Equipment / Acct. No. 612
Date / Explanation / PR / Debit / Credit / Balance
Dec. / 31 / 400 / 400
Depreciation Expense—Computer Equipment / Acct. No. 613
Date / Explanation / PR / Debit / Credit / Balance
Dec. / 31 / 1,250 / 1,250
Wages Expense / Acct. No. 623
Date / Explanation / PR / Debit / Credit / Balance
Oct. / 31 / 875 / 875
Nov. / 30 / 1,750 / 2,625
Dec. / 10 / 750 / 3,375
31 / 500 / 3,875
Insurance Expense / Acct. No. 637
Date / Explanation / PR / Debit / Credit / Balance
Dec. / 31 / 555 / 555
Rent Expense / Acct. No. 640
Date / Explanation / PR / Debit / Credit / Balance
Dec. / 31 / 2,475 / 2,475

Parts 1 and 2

Computer Supplies Expense / Acct. No. 652
Date / Explanation / PR / Debit / Credit / Balance
Dec. / 31 / 3,065 / 3,065
Advertising Expense / Acct. No. 655
Date / Explanation / PR / Debit / Credit / Balance
Oct. / 20 / 1,940 / 1,940
Dec. / 2 / 1,025 / 2,965
Mileage Expense / Acct. No. 676
Date / Explanation / PR / Debit / Credit / Balance
Nov. / 1 / 320 / 320
28 / 384 / 704
Dec. / 29 / 192 / 896
Miscellaneous Expenses / Acct. No. 677
Date / Explanation / PR / Debit / Credit / Balance
Nov. / 22 / 250 / 250
Repairs Expense—Computer / Acct. No. 684
Date / Explanation / PR / Debit / Credit / Balance
Oct. / 17 / 805 / 805
Dec. / 3 / 500 / 1,305

Part 3

SUCCESS SYSTEMS

Adjusted Trial Balance

December 31, 2004

Debit Credit

Cash ...... $ 58,160

Accounts receivable ...... 5,668

Computer supplies ...... 580

Prepaid insurance ...... 1,665

Prepaid rent ...... 825

Office equipment ...... 8,000

Accumulated depreciation—Office equipment...... $ 400

Computer equipment ...... 20,000

Accumulated depreciation—Computer equipment...... 1,250

Accounts payable ...... 1,100

Wages payable ...... 500

Unearned computer services revenue ...... 1,500

K. Breeze, Capital...... 83,000

K. Breeze, Withdrawals...... 7,100

Computer services revenue ...... 31,284

Depreciation expense—Office equipment ...... 400

Depreciation expense—Computer equipment...... 1,250

Wages expense ...... 3,875

Insurance expense ...... 555

Rent expense ...... 2,475

Computer supplies expense ...... 3,065

Advertising expense...... 2,965

Mileage expense ...... 896

Miscellaneous expenses ...... 250

Repairs expense—Computer ...... 1,305 ______

Totals...... $119,034 $119,034

Part 4

SUCCESS SYSTEMS

Income Statement

For Three Months Ended December 31, 2004

Revenue

Computer services revenue...... $31,284

Expenses

Depreciation expense—Office equipment...... $ 400

Depreciation expense—Computer equipment...... 1,250

Wages expense...... 3,875

Insurance expense...... 555

Rent expense...... 2,475

Computer supplies expense...... 3,065

Advertising expense...... 2,965

Mileage expense...... 896

Miscellaneous expenses...... 250

Repairs expense—Computer...... 1,305

Total expenses...... 17,036

Net income...... $14,248

Part 5

SUCCESS SYSTEMS

Statement of Owner’s Equity

For Three Months Ended December 31, 2004

K. Breeze, Capital, October 1, 2004...... $ 0

Plus: Owner investment...... 83,000

Net income...... 14,248

97,248

Less: Owner withdrawals...... 7,100

K. Breeze, Capital, December 31, 2004...... $90,148

Part 6

SUCCESS SYSTEMS

Balance Sheet

December 31, 2004

Assets

Cash ...... $58,160

Accounts receivable ...... 5,668

Computer supplies ...... 580

Prepaid insurance ...... 1,665

Prepaid rent ...... 825

Office equipment ...... $ 8,000

Accumulated depreciation—Office equipment...... (400) 7,600

Computer equipment...... 20,000

Accumulated depreciation—Computer equipment...... (1,250) 18,750

Total assets...... $93,248

Liabilities

Accounts payable...... $ 1,100

Wages payable...... 500

Unearned computer services revenue...... 1,500

Total liabilities...... 3,100

Equity

K. Breeze, Capital...... 90,148

Total liabilities and equity...... $93,248

Closing entries:

2004

Dec. 31 Computer Services Revenue ...... 403 .31,284

Income Summary...... 901. 31,284

To close the revenue account.

31 Income Summary...... 901.17,036

Depreciation Exp–Office Equipment... 612. 400

Depreciation Exp–Computer Equipment 613. 1,250

Wages Expense ...... 623. 3,875

Insurance Expense ...... 637. 555

Rent Expense ...... 640. 2,475

Computer Supplies Expense ...... 652. 3,065

Advertising Expense ...... 655. 2,965

Mileage Expense ...... 676. 896

Miscellaneous Expenses ...... 677. 250

Repairs Expense—Computer ...... 684. 1,305

To close the expense accounts.

31 Income Summary...... 901.14,248

K. Breeze, Capital...... 301. 14,248

To close the Income Summary account.

31 K. Breeze, Capital...... 301.7,100

K. Breeze, Withdrawals...... 302. 7,100

To close the withdrawals account.

Note: All accounts with numbers that start with the digits 1 or 2 (the permanent accounts) are unaffected by the closing process.

General Ledger

Cash / Acct. No. 101
Date / Explanation / PR / Debit / Credit / Balance
Oct. / 1 / 55,000 / 55,000
2 / 3,300 / 51,700
5 / 2,220 / 49,480
8 / 1,420 / 48,060
15 / 4,800 / 52,860
17 / 805 / 52,055
20 / 1,940 / 50,115
22 / 1,400 / 51,515
31 / 875 / 50,640
31 / 3,600 / 47,040
Nov. / 1 / 320 / 46,720
2 / 4,633 / 51,353
5 / 1,125 / 50,228
18 / 2,208 / 52,436
22 / 250 / 52,186
28 / 384 / 51,802
30 / 1,750 / 50,052
30 / 2,000 / 48,052
Dec. / 2 / 1,025 / 47,027
3 / 500 / 46,527
4 / 3,950 / 50,477
10 / 750 / 49,727
14 / 1,500 / 51,227
20 / 5,625 / 56,852
28 / 3,000 / 59,852
29 / 192 / 59,660
31 / 1,500 / 58,160
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 / 0
28 / 5,208 / 5,208
Nov. / 8 / 5,668 / 10,876
18 / 2,208 / 8,668
24 / 3,950 / 12,618
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
Office Equipment / Acct. No. 163
Date / Explanation / PR / Debit / Credit / Balance
Oct. / 1 / 8,000 / 8,000
Accumulated Depreciation—Office Equipment / Acct. No. 164
Date / Explanation / PR / Debit / Credit / Balance
Dec. / 31 / 400 / 400
Computer Equipment / Acct. No. 167
Date / Explanation / PR / Debit / Credit / Balance
Oct. / 1 / 20,000 / 20,000
Accumulated Depreciation—Computer Equipment / Acct. No. 168
Date / Explanation / PR / Debit / Credit / Balance
Dec. / 31 / 1,250 / 1,250
Accounts Payable / Acct. No. 201
Date / Explanation / PR / Debit / Credit / Balance
Oct. / 3 / 1,420 / 1,420
8 / 1,420 / 0
Dec. / 15 / 1,100 / 1,100
Wages Payable / Acct. No. 210
Date / Explanation / PR / Debit / Credit / Balance
Dec. / 31 / 500 / 500
Unearned Computer Services Revenue / Acct. No. 236
Date / Explanation / PR / Debit / Credit / Balance
Dec. / 14 / 1,500 / 1,500
K. Breeze, Capital / Acct. No. 301
Date / Explanation / PR / Debit / Credit / Balance
Oct. / 1 / 83,000 / 83,000
Dec. / 31 / 14,248 / 97,248
31 / 7,100 / 90,148
K. Breeze, Withdrawals / Acct. No. 302
Date / Explanation / PR / Debit / Credit / Balance
Oct. / 31 / 3,600 / 3,600
Nov. / 30 / 2,000 / 5,600
Dec. / 31 / 1,500 / 7,100
Dec. / 31 / Closing / 7,100 / 0
Computer Services Revenue / Acct. No. 403
Date / Explanation / PR / Debit / Credit / Balance
Oct. / 6 / 4,800 / 4,800
12 / 1,400 / 6,200
28 / 5,208 / 11,408
Nov. / 2 / 4,633 / 16,041
8 / 5,668 / 21,709
24 / 3,950 / 25,659
Dec. / 20 / 5,625 / 31,284
31 / Closing / 31,284 / 0
Depreciation Expense—Office Equipment / Acct. No. 612
Date / Explanation / PR / Debit / Credit / Balance
Dec. / 31 / 400 / 400
31 / Closing / 400 / 0
Depreciation Expense—Computer Equipment / Acct. No. 613
Date / Explanation / PR / Debit / Credit / Balance
Dec. / 31 / 1,250 / 1,250
31 / Closing / 1,250 / 0
Wages Expense / Acct. No. 623
Date / Explanation / PR / Debit / Credit / Balance
Oct. / 31 / 875 / 875
Nov. / 30 / 1,750 / 2,625
Dec. / 10 / 750 / 3,375
31 / 500 / 3,875
31 / Closing / 3,875 / 0
Insurance Expense / Acct. No. 637
Date / Explanation / PR / Debit / Credit / Balance
Dec. / 31 / 555 / 555
31 / Closing / 555 / 0
Rent Expense / Acct. No. 640
Date / Explanation / PR / Debit / Credit / Balance
Dec. / 31 / 2,475 / 2,475
31 / Closing / 2,475 / 0
Computer Supplies Expense / Acct. No. 652
Date / Explanation / PR / Debit / Credit / Balance
Dec. / 31 / 3,065 / 3,065
31 / Closing / 3,065 / 0
Advertising Expense / Acct. No. 655
Date / Explanation / PR / Debit / Credit / Balance
Oct. / 20 / 1,940 / 1,940
Dec. / 2 / 1,025 / 2,965
31 / Closing / 2,965 / 0
Mileage Expense / Acct. No. 676
Date / Explanation / PR / Debit / Credit / Balance
Nov. / 1 / 320 / 320
28 / 384 / 704
Dec. / 29 / 192 / 896
31 / Closing / 896 / 0
Miscellaneous Expense / Acct. No. 677
Date / Explanation / PR / Debit / Credit / Balance
Nov. / 22 / 250 / 250
Dec. / 31 / Closing / 250 / 0
Repairs Expense—Computer / Acct. No. 684
Date / Explanation / PR / Debit / Credit / Balance
Oct. / 17 / 805 / 805
Dec. / 3 / 500 / 1,305
31 / Closing / 1,305 / 0
Income Summary / Acct. No. 901
Date / Explanation / PR / Debit / Credit / Balance
Dec. / 31 / Closing / 31,284 / 31,284
31 / Closing / 17,036 / 14,248
31 / Closing / 14,248 / 0

SUCCESS SYSTEMS

Post-Closing Trial Balance

December 31, 2004

Debit Credit

Cash...... $58,160

Accounts receivable...... 5,668

Computer supplies...... 580

Prepaid insurance...... 1,665

Prepaid rent...... 825

Office equipment...... 8,000

Accumulated depreciation—Office equipment...... $ 400

Computer equipment...... 20,000

Accumulated depreciation—Computer equipment...... 1,250

Accounts payable...... 1,100

Wages payable...... 500

Unearned computer services revenue...... 1,500

K. Breeze, Capital...... 90,148

Totals...... $94,898 $94,898