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The December 31, 2021, adjusted trial balance of Business Solutions (reflecting its transactions from October through December of 2021) follows. Number Account Title Debit Credit 101 Cash $ 48,372 106 Accounts receivable 5,668 126 Computer supplies 580 128 Prepaid insurance 1,665 131 Prepaid rent 825 163 Office equipment 8,000 164 Accumulated depreciation—Office equipment $ 400 167 Computer equipment 20,000 168 Accumulated depreciation—Computer equipment 1,250 201 Accounts payable 1,100 210 Wages payable 500 236 Unearned computer services revenue 1,500 301 S. Rey, Capital 73,000 302 S. Rey, Withdrawals 7,100 403 Computer services revenue 31,284 612 Depreciation expense—Office equipment 400 613 Depreciation expense—Computer equipment 1,250 623 Wages expense 3,875 637 Insurance expense 555 640 Rent expense 2,475 652 Computer supplies expense 3,065 655 Advertising expense 2,753 676 Mileage expense 896 677 Miscellaneous expenses 250 684 Repairs expense—Computer 1,305 901 Income summary 0 Totals $ 109,034 $ 109,034 Required: 1. Prepare an income statement for the three months ended December 31, 2021. 2. Prepare a statement of owner's equity for the three months ended December 31, 2021. Hint: The S. Rey, Capital account balance was $0 on October 1, and owner investments were $73,000 this period. 3. Prepare a classified balance sheet as of December 31, 2021. 4. Record the closing entries as of December 31, 2021. 5. Prepare a post-closing trial balance as of December 31, 2021.

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The income statement, statement of owner's equity for the three months, classified balance sheet, record of the closing entries, and the post-closing trial balance have all been prepared for Business Solution, as shown in the images attached below, as of Dec. 31, 2021. (See attachment).

1. Question 1 is the income statement of Business Solution for the period of three month ended Dec. 31st, 2021 prepared to determine the net income which is equal to $14,460.

The net income is arrived at as follows:

  • Net income = Total Revenue less Revenue Expenses

2. Question number two deals with the owners equity, as at Dec. 21st, 2021, which is equal to $80,360.

Owner's Equity is arrived at as follows:

  • Capital + Net Income - Withdrawal

3. Question 3 refers to the Balance Sheet of Business Solution as at Dec. 31st, 2021.

The Balance Sheet is statement of affairs, that shows the financial positions of a business.

The Balance Sheet has 2 parts, the assets and the liabilities.

The assets refers to what the business owns, financed by the liabilities.

  • The total assets of Business Solution, as at Dec. 31st, 2021 equals $83,460.
  • Owner's equity + Liabilities = total assets, i.e. $83,460.

4. Question 4 gives summary of the closing entries of Business Solution as at Dec. 31st, 2021.

The closing entries shows the balances remaining in the books of accounts after all adjustments have been made.

5. Question 5 shows the post trial balance of Business Solution as at Dec. 31st, 2021.

The post-trial balance is the least of all balances remaining in the books of accounts extracted on Dec. 31st 2021 after all adjustments have been made.

  • The totals, that is debit and credit of the trial balance equals $105,964.

In summary, the income statement, statement of owner's equity for the three months, classified balance sheet, record of the closing entries, and the post-closing trial balance have all been prepared for Business Solution, as shown in the images attached below, as of Dec. 31, 2021. (See attachment).

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