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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, 2017. Santana Rey decided to add a fourth digit 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. No . Account Title Debit credit 101 Cash $48, 512 106.1 Alex's Engineering Co. 106.2 Wildcat Services 106.3 Easy Leasing 0 106.4 IFM CO. 3, 060 106.5 Liu Corp. 0 106.6 Gomez Co. 2, 668 106.7 Delta Co. 106.8 KC, Inc. 106.9 Dream, Inc. 119 Merchandise inventory 126 Computer supplies 680 128 Prepaid insurance 1, 908 131 Prepaid rent 865 163 office equipment 8, 160 164 Accumulated depreciation-Office equipment $ 380 167 Computer equipment 20, 300 168 Accumulated depreciation-Computer equipment 1, 210 201 Accounts payable 1, 200 210 Wages payable 700 236 Unearned computer services revenue 1, 390 307 Common stock 73, 903 318 Retained earnings 7, 370 319 Dividends 0 403 Computer services revenue 413 Sales 414 Sales returns and allowances 415 Sales discounts 502 Cost of goods sold 612 Depreciation expense-Office equipment 613 Depreciation expense-Computer equipment 623 Wages expense 637 Insurance expense 640 Rent expense 652 Computer supplies expenseUJL 655 676 677 684 uumpuLcl JUPPLLGD cnpcuac Advertising expense Mileage expense Miscellaneous expenses Repairs expenseComputer GOGOC In response to requests from customers, 8. Rey will begin selling computer software. The company will extend credit terms of1i'10. nl30, 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. Also. Business Solutions does not use reversing entries and, therefore. all revenue and expense accounts have zero beginning balances as of January 1, 2013. Its transactions for January through March follow: Jan. 4 5 ? 9 11 13 15 16 1? 20 22 24 26 25 Feb. W H The company paid cash to Lyn Addie for five days' work at the rate of $175 per day. Four of the five days relate to wages payable that were accrued in the prior year. Santana Rey invested an additional $24,463 cash in the company in exchange for more common stock. The company purchased $7,636 of merchandise from Kansas Corp. with terms of 1I16, nf33, FOB shipping point, invoice dated January ?. The company received $2,668 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 $5,356, which is the total price of $6,?43 less the advance payment of $1,393. The company sold merchandise with a retail value of $4,836 and a cost of $3,373 to Liu Corp., invoice dated January 13. The company paid $683 cash for freight charges on the merchandise purchased on January 7. The company received $4,193 cash from Delta Co. for computer services provided. The company paid Kansas Corp. for the invoice dated January ?, net of the discount. Liu Corp. returned $433 of defective merchandise from its invoice dated January 13. The returned merchandise, which had a $363 cost, is discarded. (The policy of Business Solutions is to leave the cost of defective products in cost of goods sold.) The company received the balance due from Liu Corp., net of both the discount and the credit for the returned merchandise. The company returned defective merchandise to Kansas Corp. and accepted a credit against future purchases. The defective merchandise invoice cost, net of the discount, was $486. The company purchased $9,836 of merchandise from Kansas Corp. with terms of 1f16, nf33, FOB destination, invoice dated January 26. The company sold merchandise with a $4,633 cost for $5,856 on credit to KC, Inc., invoice dated January 26. The company paid cash to Lyn Addie for 16 days' work at $1?5 per day. The company paid $2,595 cash to Hillside Hall for another three months' rent in advance. The company paid Kansas Corp. for the balance due, net of the cash discount, less the $486 amount in the credit memorandum. Feb. 1 Mar. 3 30 31 unacinuciun, anuiuc uaLEu annually LU. The company January 26. The company The company The company sold merchandise with a $4,633 cost for $5,353 on credit to KC, Inc., invoice dated paid cash to Lyn Addie for 13 days' work at $175 per day. paid $2,595 cash to Hillside Hall for another three months' rent in advance. paid Kansas Corp. for the balance due, net of the cash discount, less the $433 amount in the credit memorandum. The company The company The company The company February 23. The company The company The company dated March The company The company The company The company December 15 The company The company dated March The company March 33. The company paid $423 cash to the local newspaper for an advertising insert in today's paper. received the balance due from Alex's Engineering Co. for fees billed on January 11. paid $4,733 cash in dividends. sold merchandise with a $2,543 cost for $3,363 on credit to Delta Co., invoice dated paid cash to Lyn Addie for eight days' work at $175 per day. reimbursed Santana Rey for business automobile mileage (333 miles at $3.32 per mile). purchased $2,763 of computer supplies from Harris Office Products on credit, invoice 8. received the balance due from Delta Co. for merchandise sold on February 23. paid $923 cash for minor repairs to the company's computer. received $5,333 cash from Dream, Inc., for computing services provided. paid the full amount due to Harris Office Products, consisting of amounts created on (of $1,233) and March 3. billed Easy Leasing for $9,167 of computing services provided. sold merchandise with a $2,372 cost for $2,373 on credit to wildcat Services, invoice 25. sold merchandise with a $1,393 cost for $2,333 on credit to IFM Company, invoice dated reimbursed Santana Rey for business automobile mileage (933 miles at $3.32 per mile). The following additional facts are available for preparing adjustments on March 31 prior to financial statement preparation: a. The March 31 amount of computer supplies still available totals $2,015. b. Three more months have expired since the company purchased its annual insurance policy at a $2,544 cost for 12 months of coverage. c. Lyn Addie has not been paid for seven days of work at the rate of $175 per day. d. Three months have passed since any prepaid rent has been transferred to expense. The monthly rent expense is $865. e. Depreciation on the computer equipment for January 1 through March 31 is $1,210. f. Depreciation on the ofce equipment for January 1 through March 31 is $380. 9. The March 31 amount of merchandise inventory still available totals $644. 5. Prepare a statement of retained earnings (from the adjusted trial balance in part 3] for the three months ended March 31, 2018. Retained earnings. Dec. 31. 201? Retained earnings. March 31. 2018