Revenues Cash Net sales BUSINESS SOLUTIONS Income Statement For Three Months Ended March 31, 2022 Total revenues Expenses Cost of goods sold Accumulated depreciation-Office equipment Accumulated depreciation-Computer equipment Wages expense Insurance expense Rent expense Computer supplies expense Advertising expense Mileage expense Repairs expense-Computer Total expenses Net income $ 13,960 380 1.180 3.515 2,565 855 910 420 441 1,470 $ 48,392 90,060 138,452 25,696 $ 112,756 Dequired D Gross sales Less: Sales retums and allowances Less: Sales discounts Net sales Cost of goods sold Gross profit Expenses Selling expenses Wages expense Mileage expense Advertising expense Total selling expenses 69 $ $ 67 57,318 600 40 640 56,678 13,960 42,718 3,515 441 420 General and administrative expenses Depreciation expense-Office equipment 380 Depreciation expense-Computer equipment 1,180 Insurance expense 2,565 Rent expense 855 Computer supplies expense 910 Repairs expense-Computer 1,470 Total general and administrative expenses Total expenses Net income 60 $ 4,376 7,360 11,736 30,982 Santana Rey created Business Solutions on October 1, 2021. 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, 2021. 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. 101 106.1 106.2 Cash Alex's Engineering Company Wildcat Services 106.3 Easy Leasing 106.4 IFM Company 106.5 Liu Corporation 106.6 Gomez Company 106.7 Delta Company 106.8 KC, Incorporated 106.9 Dream, Incorporated 119 Merchandise inventory 126 Computer supplies 128 Prepaid insurance 131 Prepaid rent 163 Office equipment 164 Accumulated depreciation-Office equipment 167 Computer equipment Humm$ 48,392 LODIC 0 0 0 3,150 0 2,688 0 0 0 0 600 1,827 855 8,050 $ 380 20,700 168 Accumulated depreciation-Computer equipment 201 Accounts payable 210 Wages payable 236 Unearned computer services revenue 1,180 1,170 740 1,470 73,962 319 403 TOE 318 Common stock Retained earnings Dividends Computer services revenue 413 Sales 414 Sales returns and allowances 415 Sales discounts 502 Cost of goods sold 612 613 623 Wages expense 637 640 Rent expense 652 655 676 Mileage expense 677 Depreciation expense Office equipment Depreciation expense Computer equipment Insurance expense Computer supplies expense Advertising expense Miscellaneous expenses 684 Repairs expense-Computer 7,360 0 0 0 0 0 0 0 0 0 0 0 0 January 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. January 5 Santana Rey invested an additional $25,000 cash in the company in exchange for more common stock. January 7 The company purchased $7,500 of merchandise from Kansas Corporation with terms of 1/10, n/30, FOB shipping point, invoice dated January 7. January 9 The company received $2,688 cash from Gomez Company as full payment on its account. January 11 The company completed a five-day project for Alex's Engineering Company and billed it $5,410, which is the total price of $6,880 less the advance payment of $1,470. The company debited Unearned Computer Services Revenue for $1,470. January 13 The company sold merchandise with a retail value of $4,600 and a cost of $3,520 to Liu Corporation, invoice dated January 13. January 15 The company paid $750 cash for freight charges on the merchandise purchased on January 7. January 16 The company received $4,050 cash from Delta Company for computer services provided. January 17 The company paid Kansas Corporation for the invoice dated January 7, net of the discount. January 20 The company gave a price reduction (allowance) of $600 to Liu Corporation and credited Liu's accounts receivable for that amount. January 22 January 24 January 26 January 26 The company received the balance due from Liu Corporation, net of the discount and the allowance. The company returned defective merchandise to Kansas Corporation and accepted a credit against future purchases (debited accounts payable). The defective merchandise invoice cost, net of the discount, was $486. The company purchased $9,500 of merchandise from Kansas Corporation with terms of 1/10, n/30, FOB destination, invoice dated January 26. The company sold merchandise with a $4,570 cost for $5,990 on credit to KC, Incorporated, invoice dated January 26. January 31 The company paid cash to Lyn Addie for 10 days' work at $185 per day. February 1 The company paid $2,565 cash to Hillside Mall for another three months' rent in advance. February 3 The company paid Kansas Corporation for the balance due, net of the cash discount, less the $486 credit from merchandise returned on January 24. February 5 The company paid $420 cash to Facebook for an advertisement to appear on February 5 only. February 11 The company received the balance due from Alex's Engineering Company for fees billed on January 11. February 15 The company paid a $4,750 cash dividend. February 23 The company sold merchandise with a $2,610 cost for $3,380 on credit to Delta Company, invoice dated February 23. February 26 The company paid cash to Lyn Addie for eight days' work at $185 per day. February 27 The company reimbursed Santana Rey $256 cash for business automobile mileage. The company recorded the reimbursement as "Mileage Expense. March 8 The company purchased $2,850 of computer supplies from Harris Office Products on credit with invoice dated March 8. March The company received the balance due from Delta Company for merchandise sold on February 23. March 11 The company paid $910 cash for minor repairs to the company's computer. March 16 The company received $5,370 cash from Dream, Incorporated, for computing services provided. March 19 The company paid the full amount due of $4,020 to Harris Office Products, consisting of amounts created on December 15 (of $1,170) and March 8. March 24 The company billed Easy Leasing for $9,127 of computing services provided. March 25 The company sold merchandise with a $2,192 cost for $2,880 on credit to Wildcat Services, invoic dated March 25. March 30 The company sold merchandise with a $1,068 cost for $2,380 on credit to IFM Company, invoice dated March 30. March 31 The company reimbursed Santana Rey $128 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 $2,055. b. Prepaid Insurance coverage of $609 expired during this three-month period. c. Lyn Addie has not been paid for seven days of work at the rate of $185 per day. d. Prepaid rent of $2,565 expired during this three-month period. e. Depreciation on the computer equipment for January 1 through March 31 is $1,180. f. Depreciation on the office equipment for January 1 through March 31 is $380. g. The March 31 amount of merchandise inventory still available totals $554.