Computer Solutions Accounting

Question

You have been asked to prepare the financial statements for Computer Solutions for the

year ended December 31, 2022. The following additional facts are collected for use in

making adjusting entries prior to preparing financial statements at year end (Round all

calculations to the nearest dollar):

a. Interest expense on the mortgage is only for two months. Mortgage was taken

out on October 1, 2022.

b. Customer note receivable dated November 14 at 5% interest due at maturity.

(Use 360 day year.)

c. Lease with Sushi Coma began November 1, 2022.

d. Prepaid insurance balance at December 31, 2021 was $1,125 representing

general liability insurance for January through March 2022. The general liability

annual premium of $5,052 was paid on April 1, 2022 and debited to prepaid

insurance account. One year’s premium was paid on October 4, 2022, for

property and liability insurance policy that began October 1, 2022.

e. Received a statement from Nusbaum Realty indicating Computer Solutions had

paid rent of $31,500 for 2022.

f. R. Santana estimates that 1% of accounts receivable are uncollectible at

December 31, 2022. To comply with GAAP Computer Solutions has decided to

use the allowance method of recording bad debts. (Use AR balance from Part 3

which should equal $15,660 to calculate allowance balance)

g. On January 2, 2023, R. Santana billed Mason, Inc. $8,750 for computer services

completed on December 31, 2022.

h. Computer supplies of $936 are on hand at December 31, 2022.

i. A physical count of merchandise inventory was completed the morning of

January 2, 2023, showing inventory on hand of $7,800.

j. The following information is available relating to fixed assets at 12/31/22:

Computer Equipment: Acquired 10/1/20 at a cost of $22,000, $0 residual

value expected, expected life of 5 years, straight-line method of depreciation

Office Equipment: Acquired 10/1/20 at a cost of $5,000, $0 residual value

expected, expected life of 10 years, straight-line method of depreciation.

Acquired 10/1/22 at a cost of $43,000 and no expected residual value,

straight-line method of depreciation over a 10 year useful life.

Building: Acquired 10/1/22 at a cost of$258,000 and a residual value of

$50,000. Useful life is estimated at 40 years and the straight-line method of

depreciation is used by Computer Solutions.

Answer 1

Hello! This is not a Managerial/ Management Accounting question. Also, it's merely an excerpt -- more information is needed to solve this (good, comprehensive) Financial Accounting problem.

I am here to help! -Basil CPA