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[The following information applies to the questions displayed below) 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 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 Debit $48,552 Credit 3,170 2,808 No. Account Title 101 Cash 106.1 Alex's Engineering Co. 106.2 Wildcat Services 106.3 Easy Leasing 106.4 IFM Co. 106.5 Liu Corp. 106.6 Gomez Co. 106.7 Delta Co. 106.8 KC, Inc. 106.9 Dream, Inc. 119 Merchandise inventory 126 Computer supplies 128 Prepaid insurance Prepaid rent 163 Office equipment Accumulated depreciation-office equipment 167 Computer equipment @ 660 2,070 925 8,110 132 210 164 21,800 GET 0 0 660 2,070 925 8,110 $ 210 21,800 1,070 1,150 540 1,390 74,575 9,160 106.9 Dream, Inc. 119 Merchandise inventory 126 Computer supplies 128 Prepaid insurance 131 Prepaid rent 163 Office equipment 164 Accumulated depreciation-office equipment 167 Computer equipment 168 Accumulated depreciation-Computer equipment 201 Accounts payable 210 Wages payable 236 Unearned computer services revenue 307 Common stock 318 Retained earnings 319 Dividends 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 expense 655 Advertising expense 676 Mileage expense 677 Miscellaneous expenses 684 Repairs expense-Comouter @ 0 @ WALL 74,575 9,160 B 307 318 319 403 413 414 415 502 612 613 623 637 640 652 655 676 677 684 IPLE Common stock Retained earnings Dividends Computer services revenue Sales Sales returns and allowances Sales discounts 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 Repairs expense-Computer 0 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. 4 The company paid cash to Lyn Addie for five days' work at the rate of $135 per day. Four of the five days relate to wages payable that were accrued in the prior year. 5 Santana Rav invested an additional $24.109 cash in the romany in change for more on stock 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. 4 The company paid cash to Lyn Addie for five days' work at the rate of $135 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, 100 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, 1/30, FOB shipping point, invoice dated January 7. 9 The company received $2,808 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 $5,480, which is the total price of $6,870 less the advance payment of $1,390. The company debited Unearned Computer Services Revenue for $1,390. 13 The company sold merchandise with a retail value of $4,400 and a cost of $3,400 to Liu Corp., invoice dated January 13. 15 The company paid $710 cash for freight charges on the merchandise purchased on January 7. 16 The company received $4,030 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 $700 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 $486. 26 The company purchased $9,900 of merchandise from Kansas Corp. with terms of 1/10, n/30, FOB destination, invoice dated January 26. 26 The company told merchandise with a $4,500 cost for 55,858 on credit to KC, Inc., invoice dated January 26Pvpatte 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 $486. 26 The company purchased $9,900 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 $4,500 cost for $5,850 on credit to KC, Inc., invoice dated January 26. 31 The company paid cash to Lyn Addie for 10 days work at $135 per day. Feb. 1 The company paid $2,775 cash to Hillside Mal for another three months' rent in advance. 3 The company paid Kansas Corp. for the balance due, net of the cash discount, less the $486 credit from merchandise returned on January 24. 5 The company paid $540 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 $4,720 cash dividend. 23 The company sold merchandise with a $2,610 cost for $3,280 on credit to Delta Co., invoice dated February 23. 26 The company paid cash to Lyn Addie for eight days' work at $135 per day. 27 The company reimbursed Santana Rey $320 cash for business automobile mileage. The company recorded the reimbursement as "Mileage Expense." Mar. 8 The company purchased $2,810 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 $850 cash for minor repairs to the company's computer. 16 The company received $5,360 cash from Dream, Inc., for computing services provided. 19 The company paid the full amount due of $3,960 to Harris Office Products, consisting of amounts created on December 15 (of $1,150) and March 8. 24 The company billed Easy Leasing for $9,147 of computing services provided. 25 The company sold merchandise with a $2,052 cost for $2,910 on credit to Wildcat Services, invoice dated March 25. 30 The company sold merchandise with a $1,168 cost for $2,270 on credit to IFM Company, invoice dated March 30. 31 The company reimbursed Santana Rey 5384 cash for business autonobile mileage. The company recorded the span reimbursement as "Mileage Expense." VI CAHL way Mar. WU OLAJJ pe way. 27 The company reimbursed Santana Rey $320 cash for business automobile mileage. The company recorded the reimbursement as "Mileage Expense." 8 The company purchased $2,810 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 $850 cash for minor repairs to the company's computer. 16 The company received $5,360 cash from Dream, Inc., for computing services provided. 19 The company paid the full amount due of $3,960 to Harris Office Products, consisting of amounts created on December 15 (of $1,150) and March 8. 24 The company billed Easy Leasing for $9,147 of computing services provided. 25 The company sold merchandise with a $2,052 cost for $2,910 on credit to Wildcat Services, invoice dated March 25. 30 The company sold merchandise with a $1,168 cost for $2,270 on credit to IFM Company, invoice dated March 30. 31 The company reimbursed Santana Rey $384 cash for business automobile mileage. The company recorded the reimbursement as "Mileage Expense." 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 $2,175. b. Prepaid Insurance coverage of $690 expired during this 3-month period. c. Lyn Addie has not been paid for seven days of work at the rate of $135 per day d. Prepaid rent of $2,775 expired during this 3-month period. e. Depreciation on the computer equipment for January 1 through March 31 is $1,070. 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 $604. 17 Jan 31 Wages expense Cash 1,350 1,350 18 Feb 01 2,775 Prepaid rent Cash 2,775 19 Feb 03 9,414 Accounts payable Merchandise inventory Cash 94 9,320 20 Feb 05 540 Advertising expense Cash 540 21 Feb 11 5,480 Cash Accounts receivable-Alex's Engineering Co. O 5,480 22 Feb 15 4,720 Dividends Cash O 4.720 101 Cash Date Debit Credit Balance Dec. 31 48,552 47,877 Jan. 04 675 Jan. 05 24,100 2.808 Jan. 09 71,977 74,785 74,075 Jan. 15 710 Jan. 16 4,030 78,105 Jan. 17 7,128 70,977 74,640 Jan. 22 3,663 Jan. 31 1,350 73,290 Feb. 01 70,515 2,775 9,320 X Feb. 03 61.195 Feb. 05 540 60.655 66,135 Feb. 11 5,480 Feb. 15 61.415 4,720 1,080 Feb. 26 60.335 119 Merchandise Inventory Debit Credit Date Balance Dec. 31 0 Jan. 07 7,200 7,200 Jan. 13 3,400 3,800 4,510 Jan. 15 710 Jan. 17 72 4,438 Jan. 24 486 Jan. 26 4,500 Feb. 03 94 x 3,952 (548) (642) (3,252) (5,304) (6,472) Feb. 23 2,610 Mar. 25 2,052 Mar. 30 1,168 Adjustments Adjusted Trial Balance Unadjusted Trial Balance Dr. Cr. 63,461 X Dr. Cr. Cr. . No. Dr. 63.461 101 106.1 1062 106.3 106.4 106.5 106.6 SIS 2.910 9.147 5.440 2,910 9.147 5,440 Account Title Cash Alex's Engineering Co. Wildcat Services Easy Leasing IFM CO Liu Corp Gomez Co Delta Co KC. Inc Dream, Inc Merchandise inventory Computer supplies Prepaid insurance 5,850 5.850 106.7 106.8 106.9 119 3,428 x 3.470 2.070 2.824 X 1.295 690 604 2.175 1,380 126 128 106.9 119 604 2,824 X 1,295 690 2.775 3,428 3,470 2,070 3,700 8,110 126 128 131 163 164 OO 2,175 1,380 925 8,110 210 420 210 21,800 21,800 167 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 Retained earnings Dividends Computer services revenue 1,070 1,070 2.140 168 201 945 945 210 236 307 98,675 9,160 98,675 9.160 318 4,720 4,720 319 25,407 25,407 403 403 413 414 25,407 18,710 25,407 18,710 700 700 37 415 502 13,730 0 X 612 2,824 210 1,070 945 Computer services revenue Sales Sales returns and allowances Sales discounts 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 Caminar 37 16,554 210 1,070 3,510 690 0 2565 613 623 637 640 652 655 690 2.775 1.295 2,775 1,295 540 540 704 704 676 677 COM Dar YARA 850 850 S Required information 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 0 Total revenues Expenses Total revenues 0 Expenses Total expenses 0 Required 4A Required 4B Prepare an income statement (from the adjusted trial balance in part 3) for the three months ended March 31, 2020. (b) Use a multiple-step format that begins with gross sales (service revenues plus gross product sales) and includes separate categories for net sales, cost of goods sold, selling expenses, and general and administrative expenses. Categorize the following accounts as selling expenses: Wages Expense, Mileage Expense, and Advertising Expense. Categorize the remaining expenses as general and administrative. Show less BUSINESS SOLUTIONS Income Statement For Three Months Ended March 31, 2020 $ 25,407 X $ 37 700 737 Computer services revenue Less: Sales discounts Less: Sales returns and allowances Net sales Sales Gross loss 24,670 18,710 5.960 AKT X X 16,554 X 210 1,070 3,510 21,344 690 Selling expenses Cost of goods sold Depreciation expense-Office equipment Depreciation expense-Computer equipment Wages expense Total selling expenses General and administrative expenses Insurance expense Rent expense Computer supplies expense Advertising expense Mileage expense Miscellaneous expenses Repairs expense-Computer Total general and administrative expenses Total expenses x 2,775 1,295 540 X 704 X 0 X x X 850 6,854 28.198 (22,238) $ Answer is complete but not entirely correct. BUSINESS SOLUTIONS Statement of Retained Earnings For Three Months Ended March 31, 2020 Retained earnings, Dec. 31, 2019 $ Add: Net income 9,160 15,182 X 24.342 Less: Dividends 4,720 $ 19,622 Retained earnings, March 31, 2020 $ 63,461 2,910 x 20,437 X X BUSINESS SOLUTIONS Balance Sheet March 31, 2020 Assets Current assets Cash Unearned computer services revenue Accounts receivable Merchandise inventory Computer supplies Prepaid insurance Prepaid rent Total current assets Plant assets Office equipment Accumulated depreciation-Office equipment Office Equipment, net Computer equipment Accumulated depreciation-Computer equipment 604 2,175 1,380 925 91,892 $ GA 8,110 (420) 7,690 21,800 (2,140) WIELU 7,690 21,800 (2,140) mu vyuo Office Equipment, net Computer equipment Accumulated depreciation Computer equipment Computer equipment, net Total plant assets Total assets Liabilities 19,660 27,350 119,242 $ x $ 0 Current liabilities Accounts payable Wages payable 945 Equity Common stock Retained earnings 98,675 19,622 X Total equity Total liabilities and equity 118,297 119,242 $