Kay Breeze

On October 1, 2004, Kay Breeze launched a computer services company called Success Systems, which is organized as a sole proprietorship and provides consulting services, computer system installations, and custom program development. Breeze adopts the calendar year for reporting purposes and expects to prepare the company’s first set of financial statements on December 31, 2004. The company’s initial chart of accounts follows:
Account No. Account No.
Cash . . . . . . . . . . . . . . . . . . . . 101 K. Breeze, Capital . . . . . . . . . . . . . . . .301
Accounts Receivable . . . . . . . 106 K. Breeze, Withdrawals . . . . . . . . . . . 302
Computer Supplies . . . . . . . . . 126 Computer Services Revenue . . . . . . . . 403
Prepaid Insurance . . . . . . . . . . 128 Wages Expense . . . . . . . . . . . . . . . . . 623
Prepaid Rent . . . . . . . . . . . . . . 131 Advertising Expense . . . . . . . . . . . . . . 655
Office Equipment . . . . . . . . . . 163 Mileage Expense . . . . . . . . . . . . . . . . . 676
Computer Equipment . . . . . . . 167 Miscellaneous Expenses . . . . . . . . . . . 677
Accounts Payable . . . . . . . . . . 201 Repairs Expense—Computer . . . . . . . 684

Required
1. Prepare journal entries to record each of the following transactions for Success Systems.

Oct. 1 Breeze invested $55,000 cash, a $20,000 computer system, and $8,000 of office equipment in the business.

2 Paid $3,300 cash for four months’ rent. (Hint: Debit Prepaid Rent for $3,300.)

3 Purchased $1,420 of computer supplies on credit from Cain Office Products.

5 Paid $2,220 cash for one year’s premium on a property and liability insurance policy. (Hint:Debit Prepaid Insurance for $2,220.)

6 Billed Easy Leasing $4,800 for services performed in installing a new Web server.

8 Paid $1,420 cash for the computer supplies purchased from Cain Office Products on
October 3.

10 Hired Sherry Adams as a part-time assistant for $125 per day, as needed.

12 Billed Easy Leasing another $1,400 for services performed.

15 Received $4,800 cash from Easy Leasing on its account.

17 Paid $805 cash to repair computer equipment damaged when moving it.
20 Paid $1,940 cash for an advertisement in the local newspaper.

22 Received $1,400 cash from Easy Leasing on its account.

28 Billed Clark Company $5,208 for services performed.

31 Paid $875 cash for Sherry Adams’s wages for seven days’ work.

31 Breeze withdrew $3,600 cash for personal use.

Nov. 1 Reimbursed Breeze in cash for business automobile mileage allowance (Breeze logged 1,000 miles at $0.32 per mile).

2 Received $4,633 cash from Chang Corporation for computer services performed.

5 Purchased computer supplies for $1,125 cash from Cain Office Products.

8 Billed Gomez Co. $5,668 for services performed.

13 Received notification from Alex’s Engineering Co. that Success Systems’ bid of $3,950 for an upcoming project is accepted.

18 Received $2,208 cash from Clark Company as partial payment of the October 28 bill.

22 Donated $250 cash to the United Way in the company’s name.

24 Completed work for Alex’s Engineering Co. and sent it a bill for $3,950.

25 Sent another bill to Clark Company for the past-due amount of $3,000.

28 Reimbursed Breeze in cash for business automobile mileage (1,200 miles at $0.32 per mile).

30 Paid $1,750 cash for Sherry Adams’s wages for 14 days’ work.

30 Breeze withdrew $2,000 cash for personal use.

2. Open ledger accounts (in balance column format) and post the journal entries from part 1 to them.
3. Prepare a trial balance as of the end of November.