Accounting I

The following addional facts are available for preparing adjustments on March 31 prior to ﬁnancial statement preparaon: a. The March 31 amount of computer supplies sll available totals $2,005. b. Three more months have expired since the company purchased its annual insurance policy at a $2,220 cost for 12 months of coverage. c. Lyn Addie has not been paid for seven days of work at the rate of $125 per day. d. Three months have passed since any prepaid rent has been transferred to expense. The monthly rent expense is $825. e. Depreciaon on the computer equipment for January 1 through March 31 is $1,250. f. Depreciaon on the oﬃce equipment for January 1 through March 31 is $400. g. The March 31 amount of merchandise inventory sll available totals $704. 1. Prepare journal entries to record each of the January through March transactions. Explanaon: Jan. 17 Merchandise Inventory = $5,800 × 0.01 = $58 Jan. 20 Success Systems leaves the cost of defecve products in its costs of goods sold. If it did not, the following entry would have been recorded: General Journal Debit Credit   Loss from defective merchandise 320        Cost of goods sold 320 2. Post the journal entries in part 1 to the accounts in the company’s general ledger  3. Prepare a paral work sheet consisng of the ﬁrst six columns that includes the unadjusted trial balance, the March 31 adjustments (a) through (g), and the adjusted trial balance. Do not prepare closing entries and do not journalize the adjustments or post them to the ledger. SUCCESS SYSTEMS Partial Work Sheet March 31, 2014 Unadjusted Trial Balance Adjustments Adjusted Trial Balance No. Account Title Dr. Cr. Dr. Cr. Dr. Cr. 101 Cash 77,840 77,840 106.1 Alex’s Engineering Co. 0 0 106.2 Wildcat Services 2,800 2,800 106.3 Easy Leasing 8,900 8,900 106.4 IMF Co. 5,220 5,220 106.5 Liu Corp. 0 0 106.6 Gomez Co. 0 0 106.7 Delta Co. 0 0 106.8 KC, Inc. 5,800 5,800 106.9 Dream, Inc. 0 0 119 Merchandise inventory 799 95 704 126 Computer supplies 3,310 1,305 2,005 128 Prepaid insurance 1,665 555 1,110 131 Prepaid rent 3,300 2,475 825 163 Office equipment 8,000 8,000 164 Accumulated depreciation—Office equipment 400 400 800 167 Computer equipment 20,000 20,000 168 Accumulated depreciation—Computer equipment 1,250 1,250 2,500 201 Accounts payable 0 0 210 Wages payable 0 875 875 236 Unearned computer services revenue 0 0 301 A. Lopez, Capital 115,148 115,148 302 A. Lopez, Withdrawals 4,800 4,800 403 Computer services revenue 25,160 25,160 413 Sales 19,240 19,240 414 Sales returns and allowances 500 500 415 Sales discounts 47 47 502 Cost of goods sold 13,962 95 14,057 612 Depreciation expense—Office equipment 0 400 400 613 Depreciation expense—Computer equipment 0 1,250 1,250 623 Wages expense 2,375 875 3,250 637 Insurance expense 0 555 555 640 Rent expense 0 2,475 2,475 652 Computer supplies expense 0 1,305 1,305 655 Advertising expense 600 600 676 Mileage expense 320 320 677 Miscellaneous expenses 0 0 684 Repairs expense—Computer 960 960 Totals 161,19 8 161,19 8 6,95 5 6,95 5 163,723 163,723

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