Required Information Serial Problem Business Solutions LO P1, P2, P3, P4 [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 umber that had been used for the single Accounts Receivable account. This change allows the company to continue using the existing chart of accounts. Credit Debit $48, 372 580 1,665 825 8,000 $ 400 20,000 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 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 301 S. Rey, Capital 302 S. Rey, Withdrawals 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-Computer 1,250 1, 100 500 1,500 80, 360 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: 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. Feb. 4 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 wages payable that were accrued in the prior year. Santana Rey invested an additional $25,000 cash in the company. 7 The company purchased $5, 800 of merchandise from Kansas Corp. with terms of 1/10, 1/30, FOB shipping point, invoice dated January 7. 9 The company received $2,668 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 $5,500, which is the total price of $7,000 less the advance payment of $1,500. The company debited Unearned Computer Services Revenue for $1,500 13 The company sold merchandise with a retail value of $5,200 and a cost of $3,560 to Liu Corp., invoice dated January 13. 15 The company paid $600 cash for freight charges on the merchandise purchased on January 7. 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 discount. 20 The company gave a price reduction (allowance) of $500 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 $9,000 of merchandise from Kansas Corp. with terms of 1/10, 1/30, 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. 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 $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 Santana Rey withdrew $4, 800 cash from the company for personal use. 23 The company sold merchandise with a $2,660 cost for $3,220 on credit to Delta Co., invoice dated February 23. 26 The company paid cash to Lyn Addie for eight days' work at $125 per day. 27 The company reimbursed Santana Rey $192 for business automobile mileage. The company recorded the reimbursement as "Mileage Expense." 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 $5,260 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, invoice dated March 30. 31 The company reimbursed Santana Rey $128 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: 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 $2,005. b. Prepaid Insurance coverage of $555 expired during this 3-month period. c. Lyn Addle 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 3-month period. e. Depreciation on the computer equipment for January 1 through March 31 is $1,250. 1. Depreciation on the office equipment for January 1 through March 31 Is $400. g. The March 31 amount of merchandise Inventory still available totals $704. Part 4 4. 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. (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. Complete this question by entering your answers in the tabs below. 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 Required Required 4B 4A 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. Show less $ 27,527 17,020 44,547 BUSINESS SOLUTIONS Income Statement For Three Months Ended March 31, 2020 Revenues | Computer services revenue Net sales Total revenues Expenses | Cost of goods sold $ 14,200 Accumulated depreciation Office equipment 400 Accumulated depreciation Computer equipment 1,250 Wages expense 3,250 Insurance expense 555 Rent expense 2,475 Computer supplies expense 1,305 Advertising expense 600 Mileage expense 320 Repairs expense-Computer Miscellaneous expenses (143) Total expenses Net income 960 25,172 19,375 $ Required Required 4A 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 Computer services revenue $ 27,527 Less: Sales returns and allowances $ 17,020 Less: Sales discounts 47 17,067 Net sales 10,460 Cost of goods sold (500) Gross profit 9,960 Expenses Selling expenses Total selling expenses General and administrative expenses Total general and administrative expenses Total expenses Net income $ 9,960 5. Prepare a statement of owner's equity (from the adjusted trial balance in part 3) for the three months ended March 31, 2020. BUSINESS SOLUTIONS Statement of Owner's Equity For Three Months Ended March 31, 2020 S. Rey, Capital, Dec 31, 2019 S. Rey, Capital, March 31, 2020 $ 0 6. Prepare a classified balance sheet (from the adjusted trial balance) as of March 31, 2020. 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 liabilities and equity Required! 1. Prepare journal entries to record each of the January through March transactions. View transaction list View journal entry worksheet No General Journal Credit Date Jan 04 Wages payable Wages payable Cash Debit 500 125 Jan 05 25,000 Cash S. Rey, Capital 25,000 3 Jan 07 5,800 Merchandise inventory Accounts payable Jan 09 2,668 Cash Accounts receivable-Gomez Co. 2,668 5 Jan 11 5,500 Accounts receivable-Alex's Engineering Co. Unearned computer services revenue Computer services revenue 1,500 7,000 6 Jan 13 5,200 Accounts receivable-Liu Corp. Sales 5,200 Jan 13 Cost of goods sold 3,560 Merchandise inventory 3,560 Jan 15 600 Merchandise inventory Cash Unadjusted Trial Balance Dr. Cr. 68,0521 Adjustments Dr. Cr. Adjusted Trial Balance Dr. Cr. 68,0527 2,800 9.047 5,220 2,800 9.047 5,220 5,800 5,800 1,490 3.3101 1,565 3,400 8.000 7861 1.305 555 2,475 704 2.005 1,010 925 8,000 163 400 4001 120,000 20,000 1,250 1 1,250 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 131 Prepaid rent 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 301 S. Rey, Capital 302 S. Rey. Withdrawals 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 Mileage expense 677 Miscellaneous expenses 684 Repairs expense-Computer Totals | 1,1007 500 875 1,500 80,360 80,360 27,527 17.020 27,527 17,020 500 13,414 2.375 LN 500 47 786 14,200 4001 4001 1,250 1,250 875 3,250 555 2,475 2,475 1,305 1,305 600 320 555 600 320 143 960 148,500 9601 149,425 128,200 7,646 7,646 125,925