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Serial Problem Success Systems LO P1, P2, P3, P4

[The following information applies to the questions displayed below.]

Adria Lopez created Success Systems on October 1, 2013. 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, 2013. Adria Lopez 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	$	48,542
106.1	Alexs Engineering Co.		0
106.2	Wildcat Services		0
106.3	Easy Leasing		0
106.4	IFM Co.		3,060
106.5	Liu Corp.		0
106.6	Gomez Co.		2,768
106.7	Delta Co.		0
106.8	KC, Inc.		0
106.9	Dream, Inc.		0
119	Merchandise inventory		0
126	Computer supplies		610
128	Prepaid insurance		1,989
131	Prepaid rent		845
163	Office equipment		8,120
164	Accumulated depreciationOffice equipment			$	240
167	Computer equipment		20,500
168	Accumulated depreciationComputer equipment				1,220
201	Accounts payable				1,260
210	Wages payable			$	740
236	Unearned computer services revenue				1,420
307	Common stock				69,000
318	Retained earnings				12,554
319	Dividends	$	0
403	Computer services revenue				0
413	Sales				0
414	Sales returns and allowances		0
415	Sales discounts		0
502	Cost of goods sold		0
612	Depreciation expenseOffice equipment		0
613	Depreciation expenseComputer equipment		0
623	Wages expense		0
637	Insurance expense		0
640	Rent expense		0
652	Computer supplies expense		0
655	Advertising expense		0
676	Mileage expense		0
677	Miscellaneous expenses		0
684	Repairs expenseComputer		0

In response to requests from customers, A. Lopez 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 companys new merchandising activities. Also, Success Systems does not use reversing entries and, therefore, all revenue and expense accounts have zero beginning balances as of January 1, 2014. Its transactions for January through March follow:

Jan.	4		The company paid cash to Lyn Addie for five days work at the rate of $185 per day. Four of the five days relate to wages payable that were accrued in the prior year.
	5		Adria Lopez invested an additional $23,000 cash in the company in exchange for more common stock.
	7		The company purchased $6,100 of merchandise from Kansas Corp. with terms of 1/10, n/30, FOB shipping point, invoice dated January 7.
	9		The company received $2,768 cash from Gomez Co. as full payment on its account.
	11		The company completed a five-day project for Alexs Engineering Co. and billed it $5,390, which is the total price of $6,810 less the advance payment of $1,420.
	13		The company sold merchandise with a retail value of $4,800 and a cost of $3,560 to Liu Corp., invoice dated January 13.
	15		The company paid $780 cash for freight charges on the merchandise purchased on January 7.
	16		The company received $4,060 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		Liu Corp. returned $400 of defective merchandise from its invoice dated January 13. The returned merchandise, which had a $290 cost, is discarded. (The policy of Success Systems is to leave the cost of defective products in cost of goods sold.)
	22		The company received the balance due from Liu Corp., net of both the discount and the credit for the returned merchandise.
	24		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.
	26		The company purchased $9,800 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 $4,570 cost for $5,820 on credit to KC, Inc., invoice dated January 26.
	29		The company received a $486 credit memorandum from Kansas Corp. concerning the merchandise returned on January 24.
	31		The company paid cash to Lyn Addie for 10 days work at $185 per day.
Feb.	1		The company paid $2,535 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 $486 amount in the credit memorandum.
	5		The company paid $470 cash to the local newspaper for an advertising insert in todays paper.
	11		The company received the balance due from Alexs Engineering Co. for fees billed on January 11.
	15		The company paid $4,630 cash for dividends.
	23		The company sold merchandise with a $2,580 cost for $3,330 on credit to Delta Co., invoice dated February 23.
	26		The company paid cash to Lyn Addie for eight days work at $185 per day.
	27		The company reimbursed Adria Lopez for business automobile mileage (800 miles at $0.21 per mile).
Mar.	8		The company purchased $2,770 of computer supplies from Harris Office Products on credit, invoice dated March 8.
	9		The company received the balance due from Delta Co. for merchandise sold on February 23.
	11		The company paid $920 cash for minor repairs to the companys computer.
	16		The company received $5,310 cash from Dream, Inc., for computing services provided.
	19		The company paid the full amount due to Harris Office Products, consisting of amounts created on December 15 (of $1,260) and March 8.
	24		The company billed Easy Leasing for $9,057 of computing services provided.
	25		The company sold merchandise with a $2,122 cost for $2,810 on credit to Wildcat Services, invoice dated March 25.
	30		The company sold merchandise with a $1,198 cost for $2,350 on credit to IFM Company, invoice dated March 30.
	31		The company reimbursed Adria Lopez for business automobile mileage (600 miles at $0.21 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 $2,165.
b.	Three more months have expired since the company purchased its annual insurance policy at a $2,652 cost for 12 months of coverage.
c.	Lyn Addie has not been paid for seven days of work at the rate of $185 per day.
d.	Three months have passed since any prepaid rent has been transferred to expense. The monthly rent expense is $845.
e.	Depreciation on the computer equipment for January 1 through March 31 is $1,220.
f.	Depreciation on the office equipment for January 1 through March 31 is $240.
g.	The March 31 amount of merchandise inventory still available totals $524.

rev: 11_06_2013_QC_37724, 02_19_2014_QC_45514, 12_20_2014_QC_CS-2022

References

Section BreakLearning Objective: 04-P1 Analyze and record transactions for merchandise purchases using a perpetual system.Learning Objective: 04-P4 Define and prepare multiple-step and single-step income statements.

Serial Problem Success Systems LO P1, P2, P3, P4Learning Objective: 04-P2 Analyze and record transactions for merchandise sales using a perpetual system.

Difficulty: HardLearning Objective: 04-P3 Prepare adjustments and close accounts for a merchandising company.

1.

value: 16.66 points

Required information

Part 1

Required:
1.	Prepare journal entries to record each of the January through March transactions. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

rev: 11_06_2013_QC_37724, 12_23_2014_QC_CS-2022

References

eBook & Resources

WorksheetLearning Objective: 04-P1 Analyze and record transactions for merchandise purchases using a perpetual system.Learning Objective: 04-P4 Define and prepare multiple-step and single-step income statements.

Part 1Learning Objective: 04-P2 Analyze and record transactions for merchandise sales using a perpetual system.

Difficulty: HardLearning Objective: 04-P3 Prepare adjustments and close accounts for a merchandising company.

Check my work

2.

value: 16.66 points

Required information

Part 2

2.	Post the journal entries in part 1 to the accounts in the companys general ledger. (Note: Begin with the ledgers post-closing adjusted balances as of December 31, 2013.) (Record the transactions in the order presented. Do not skip rows.)

References

eBook & Resources

WorksheetLearning Objective: 04-P1 Analyze and record transactions for merchandise purchases using a perpetual system.Learning Objective: 04-P4 Define and prepare multiple-step and single-step income statements.

Part 2Learning Objective: 04-P2 Analyze and record transactions for merchandise sales using a perpetual system.

Difficulty: HardLearning Objective: 04-P3 Prepare adjustments and close accounts for a merchandising company.

Check my work

3.

value: 16.66 points

Required information

Part 3

3.	Prepare a partial work sheet consisting of the first six columns that includes the unadjusted trial balance, the March 31 adjustments (a) through (g), and the adjusted trial balance.

rev: 02_19_2014_QC_45514

References

eBook & Resources

WorksheetLearning Objective: 04-P1 Analyze and record transactions for merchandise purchases using a perpetual system.Learning Objective: 04-P4 Define and prepare multiple-step and single-step income statements.

Part 3Learning Objective: 04-P2 Analyze and record transactions for merchandise sales using a perpetual system.

Difficulty: HardLearning Objective: 04-P3 Prepare adjustments and close accounts for a merchandising company.

Check my work

4.

value: 16.66 points

Required information

Part 4

4.	Prepare an income statement (from the adjusted trial balance in part 3) for the three months ended March 31, 2014. Use a single-step format. List all expenses without differentiating between selling expenses and general and administrative expenses.

rev: 10_29_2013_QC_37632

References

eBook & Resources

WorksheetLearning Objective: 04-P1 Analyze and record transactions for merchandise purchases using a perpetual system.Learning Objective: 04-P4 Define and prepare multiple-step and single-step income statements.

Part 4Learning Objective: 04-P2 Analyze and record transactions for merchandise sales using a perpetual system.

Difficulty: HardLearning Objective: 04-P3 Prepare adjustments and close accounts for a merchandising company.

Check my work

5.

value: 16.66 points

Required information

Part 5

5.	Prepare a statement of retained earnings (from the adjusted trial balance in part 3) for the three months ended March 31, 2014.

References

eBook & Resources

WorksheetLearning Objective: 04-P1 Analyze and record transactions for merchandise purchases using a perpetual system.Learning Objective: 04-P4 Define and prepare multiple-step and single-step income statements.

Part 5Learning Objective: 04-P2 Analyze and record transactions for merchandise sales using a perpetual system.

Difficulty: HardLearning Objective: 04-P3 Prepare adjustments and close accounts for a merchandising company.

Check my work

6.

value: 16.70 points

Required information

Part 6

6.	Prepare a classified balance sheet (from the adjusted trial balance) as of March 31, 2014.

References

eBook & Resources

WorksheetLearning Objective: 04-P1 Analyze and record transactions for merchandise purchases using a perpetual system.Learning Objective: 04-P4 Define and prepare multiple-step and single-step income statements.

Part 6Learning Objective: 04-P2 Analyze and record transactions for merchandise sales using a perpetual system.

Difficulty: HardLearning Objective: 04-P3 Prepare adjustments and close accounts for a merchandising company.

Check my work