Chapter 4 Accounting 10 W A LIULUI . Feb 13 The company sold merchandise with a retail value of $5,200 and a cost of $3.560 toll invoice dated January 13. to Liu Corp- 15 The company paid $600 cash for freight charges on the merchandise purchased on January 16 The company received $4,000 cash from Delta Co. for computer services provided 17 The company paid Kansas Corp. for the invoice dated January 7, net of the di 20 The company gave a price reduction allowance) of $500 to Liu Corp. and credited Ile counts receivable for that amount 22 The company received the balance due from Liu Corp, net of the discount and the allowance 24 The company returned defective merchandise to Kansas Corp. and accepted a credit future purchases (debited accounts payable). The defective merchandise invoice cost of the discount, was $496. 26 The company purchased $9,000 of merchandise from Kansas Corp. with terms of 1/10. 30 FOB destination, invoice dated January 26. 26 The company sold merchandise with a $4,640 cost for $5,800 on credit to KC, Inc. invoice dated January 26. 31 The company paid cash to Lyn Addie for 10 days work at $125 per day 1 The company paid $2,475 cash to Hillside Mall for another three months' rent in advance The company paid Kansas Corp. for the balance due, net of the cash discount, less the $405 credit from merchandise returned on January 24. The company paid $600 cash to Facebook for an advertisement to appear on February 5 only. 11 The company received the balance due from Alex's Engineering Co. for fees billed on January 11, 15 The company paid a $4,800 cash dividend. 23 The company sold merchandise with a $2,660 cost for $3,220 on credit to Delta Co., invoice dated February 23. The company paid cash to Lyn Addie for eight days' work at $125 per day. The company reimbursed Santana Rey $192 cash for business automobile mileage. The com- pany recorded the reimbursement as "Mileage Expense." Mar. 8 The company purchased $2,730 of computer supplies from Harris Office Products on credit with terms of n/30, FOB destination, invoice dated March 8. 9 The company received the balance due from Delta Co, for merchandise sold on February 23 11 The company paid $960 cash for minor repairs to the company's computer. 16 The company received 55,260 cash from Dream, Inc., for computing services provided 19 The company paid the full amount due of $3,830 to Harris Office Products, consisting of amounts created on December 15 (of $1,100) and March 8. 24 The company billed Easy Leasing for $9,047 of computing services provided. 25 The company sold merchandise with a $2,002 cost for $2,800 on credit to Wildcat Services, invoice dated March 25. 30 The company sold merchandise with a $1,048 cost for $2,220 on credit to IFM Company, in- voice dated March 30. 31 The company reimbursed Santana Rey $128 cash for business automobile mileage. The com- pany recorded the reimbursement as "Mileage Expense." The following additional facts are available for preparing adjustments on March 31 prior to financial state ment preparation a. The March 31 amount of computer supplies still available totals $2,005. b. Prepaid insurance coverage of $555 expired during this three-month period. c. Lyn Addie has not been paid for seven days of work at the rate of $125 per day. d. Prepaid rent of $2,475 expired during this three-month period. e. Depreciation on the computer equipment for January 1 through March 31 is $1,250. t. Depreciation on the office equipment for January 1 through March 31 is $400. 9. The March 31 amount of merchandise inventory still available totals $704. Required Ending balances - 31: Cash $68057 319240 TB totals. 557. Ad TB totals Ys general ledger. No 1. Prepare journal entries to record each of the January through March transactions 2. Post the journal entries in part 1 to the accounts in the company's general ledger. Note: Begin with the ledger's post-closing adjusted balances as of December 31, 2019. 3. Prepare a 6-column worksheet (similar to the one shown in Ethibit 3.13) that includes the unadjusted trial balance, the March 31 adjustments (a) through ), and the adjusted trial balance. Do not prepare closing entries and do not journalize the adjustments or post them to the ledger [continued a next page] balances as of December 31 2. Prepare a 6-colume $142.600 disclades separate categories for net sales, cost of goods sold, selling expenses and coral and administrative expenses. 3. Prepare a single-step income statement for the year ended October 31. 4. Compute the current ratio, acid-test ratio, and gross margin ratio as of October 31. (Round ratios to two decimals.) Total expenses $197.100 Net income, 524.000 SERIAL PROBLEM Business Solutions P1 P2 P3 P4 This serial problem began in Chapter 1 and continues through most of the book. It previous chapter seg. ments were not completed the serial problem can begin at this point. se Santana Rey created Business Solutions on October 1, 2019. The company has been successful. and its list of customers has grown. To accommodate the growth, the accounting system is modified to set S e accounts for each customer. The following chart of accounts includes the account number used For each count and any balance as of December 31, 2019. Santana Rey decided to add a fourth dirt with a decimal point to the 106 account number that had been used for the single Accounts Receivable account. This change allows the company to continue using the existing chart of accounts. .... $48,372 1.500 73.000 101 Cash ... 1061 Alex's Engineering Co.... 106.2 Wildcat Services 106.3 Easy Leasing. 1066 MC 1055 Corp 1056 Conca. 1067 Detac. 1063 Inc ............... 1059 Dream, Inc. .... 119 Merchandise inventory... 126 Computer supplies ... 128 Prepaid insurance 131 Prepaid rent 163 ce quipment .... 164 Accumulated depretios Once unert.. 167 Compo nent... 210 Wages payable ....... 236 Uneamed computer services revenue 307 Common stock 318 Retained earnings....... 319 Dividends ............. 403 Computer services revenue 413 Sales.. 414 Sets and wiowances 415 Sal discounts ... . 502 Cost of goods sold......... 612 Depreciation expense Oce equipmen 613 Depreciation expense Computer equipm 623 Wages expense .. . 637 insurance expense ....... 540 Rent expense ........... 652 Computer suppies expense 555 Advertising expense ..... 676 Mileage pense...... 677 Miscellaneous expenses. 684 Repairs expense-Computer ....... $ 400 20.000 . 201 Computer equipment.. Accounts payable.... 1.100 In response to requests from customers, S. Rey will begin selling computer software. The company will extend credit terms of 1/10, n/30, FOB shipping point, to all customers who purchase this merchandise. However, no cash discount is available on consulting fees. Additional accounts (Nos. 119,413, 414, 415, and 502) are added to its general ledger to accommodate the company's new merchandising activities. Its transactions for January through March follow. Jan. The company paid cash to Lyn Addie for five days' work at the rate of $125 per day. Four of the five days relate to sares payable that were accrued in the prior year. 3 Santana Rey invested additional $25.000 cash in the company in exchange for more common The company purchased 55.800 of merchandise from Kansas Corp. with terms of 1/10, 1/30, FOB shipping point, invoice dated January 7. The company received 52,668 cash from Gomez Co. as full payment on its account The company completed a five-day project for Alex's Engineering Co. and billed it 55,500 which is the total price of $7.000 less the advance payment of $1,500. The company debited G Unearned Computer Services Revenue for $1,500. r e utterflock