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 up separate accounts for each customer. The following chart of accounts Includes the account number used for each account and any balance as of December 31, 2019. Santana Rey decided to add a fourth digit with a decimal polnt to the 106 account number that had been used for the single Accounts Recelvable account. Ths change allows the company to continue using the existing chart of accounts. No. Account Title Debit Credit 101 Cash $48,512 106.1 Alex's Engineering Co. 106.2 Wildcat Services 106.3 Easy Leasing 106.4 IFM Co. 3,060 106.5 Liu Corp. 106.6 Gomez Co. 2,758 106.7 Delta Co. 106.8 KC, Inc. 106.9 Dream, Inc. Merchandise inventory Computer supplies Prepaid insurance Prepaid rent Office equipment Accumulated depreciation-Office equipment Computer equipment Accumulated depreciation-Computer equipment Accounts payable Wages payable Unearned computer services revenue Common stock 119 126 710 128 2,124 131 835 163 8,130 164 $ 210 167 21,100 168 1,100 201 1,290 210 860 236 1,340 73,269 9,160 307 Retained earnings Dividends 318 319 Computer services revenue Sales 403 413 Sales returns and allowances Sales discounts 414 415 Cost of goods sold Depreciation expense-office equipment Depreciation expense-Computer equipment Wages expense Insurance expense Rent expense Computer supplies expense Advertising expense Mileage expense Miscellaneous expenses 502 612 613 623 637 640 652 655 676 677 684 Repairs expense-Computer 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 polnt, to all customers who purchase this merchandise. However, no cash discount Is avallabie 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. 4 The company paid cash to Lyn Addie for five days' work at the rate of $215 per day. Four of the five days relate to wages payable that were accrued in the prior year. 5 Santana Rey invested an additional $24,900 cash in the company in exchange for more common stock. 7 The company purchased $7,200 of merchandise from Kansas Corp. with terms of 1/10, n/30, FOB shipping point, invoice dated January 7. 9 The company received $2,758 cash from Gomez Co. as full payment on its account. 11 The company completed a five-day project for Alex's Engineering Co. and billed it $5,370, which is the total price of $6,710 less the advance payment of $1,340. The company debited Unearned Computer Services Revenue for $1,340. 13 The company sold merchandise with a retail value of $4,800 and a cost of $3,410 to Liu Corp., invoice dated January 13. 15 The company paid $790 cash for freight charges on the merchandise purchased on January 7. 16 The company received $4,120 cash from Delta Co. for computer services provided. 17 The company paid Kansas Corp. for the invoice dated January 7, net of the discount. 20 The company gave a price reduction (allowance) of $400 to Liu Corp., and credited Liu's accounts 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 against future purchases (debited accounts payable). The defective merchandise invoice cost, net of the discount, was $496. 26 The company purchased $9,200 of merchandise from Kansas Corp. with terms of 1/10, n/30, FOB destination, invoice dated January 26. 26 The company sold merchandise with a $4,460 cost for $5,840 on credit to KC, Inc., invoice dated January 26. 31 The company paid cash to Lyn Addie for 10 days' work at $215 per day. 1 The company paid $2,505 cash to Hillside Mall for another three months' rent in advance. 3 The company paid Kansas Corp. for the balance due, net of the cash discount, less the $496 credit from merchandise returned on January 24. 5 The company paid $400 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 $4,650 cash dividend. 23 The company sold merchandise with a $2,490 cost for $3,370 on credit to Delta Co., invoice dated February 23. 26 The company paid cash to Lyn Addie for eight days' work at $215 per day. 27 The company reimbursed Santana Rey $224 cash for business automobile mileage. The company recorded the reimbursement as "Mileage Expense." 8 The company purchased $2,910 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 $870 cash for minor repairs to the company's computer. 16 The company received $5,370 cash from Dream, Inc., for computing services provided. Feb. Mar. Required 4A Required 4B Prepare an income statement (from the adjusted trial balance in part 3) for the three months ended March 31, 2020. (a) Use a single-step format. List all expenses without differentiating between selling expenses and general and administrative expenses. BUSINESS SOLUTIONS Income Statement For Three Months Ended March 31, 2020 Revenues Total revenues Expenses Total expenses a. The March 31 amount of computer supplies still available totals $2,155. b. Prepaid Insurance coverage of $708 expired during this 3-month period. c. Lyn Addie has not been paid for seven days of work at the rate of $215 per day. d. Prepaid rent of $2,505 expired during this 3-month period. e. Depreciation on the computer equipment for January 1 through March 31 is $1,100. f. Depreciation on the office equipment for January 1 through March 31 is $210. g. The March 31 amount of merchandise inventory still available totals $684. 5. Prepare a statement of retained earnings (from the adjusted trial balance in part 3) for the three months ended March 31, 2020. BUSINESS SOLUTIONS Statement of Retained Earnings For Three Months Ended March 31, 2020 Retained earnings, Dec. 31, 2019 Retained earnings, March 31, 2020 2$ BUSINESS SOLUTIONS Balance Sheet March 31, 2020 Assets Current assets Total current assets Plant assets Office Equipment, net Computer equipment, net Total plant assets Total assets $ Liabilities Current liabilities Equity Total equity Total liabilities and equity