Serial Problem Business Solutions LO P1, P2, P3, P4

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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.

No.	Account Title	Debit			Credit
101	Cash	$	48,372
106.1	Alexs Engineering Co.		0
106.2	Wildcat Services		0
106.3	Easy Leasing		0
106.4	IFM Co.		3,000
106.5	Liu Corp.		0
106.6	Gomez Co.		2,668
106.7	Delta Co.		0
106.8	KC, Inc.		0
106.9	Dream, Inc.		0
119	Merchandise inventory		0
126	Computer supplies		580
128	Prepaid insurance		1,665
131	Prepaid rent		825
163	Office equipment		8,000
164	Accumulated depreciationOffice equipment				$	400
167	Computer equipment		20,000
168	Accumulated depreciationComputer equipment					1,250
201	Accounts payable					1,100
210	Wages payable					500
236	Unearned computer services revenue					1,500
301	S. Rey, Capital					80,360
302	S. Rey, Withdrawals		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, 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 companys 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 $125 per day. Four of the five days relate to wages payable that were accrued in the prior year.
		5		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, n/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 Alexs 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, n/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.
Feb.		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 Alexs 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."
Mar.		8		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 companys 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:

1. The March 31 amount of computer supplies still available totals $2,005.
2. Prepaid Insurance coverage of $555 expired during this 3-month period.
3. Lyn Addie has not been paid for seven days of work at the rate of $125 per day.
4. Prepaid rent of $2,475 expired during this 3-month period.
5. Depreciation on the computer equipment for January 1 through March 31 is $1,250.
6. Depreciation on the office equipment for January 1 through March 31 is $400.
7. The March 31 amount of merchandise inventory still available totals $704.

3. Prepare a 6-column work sheet (similar to the one shown in Exhibit 3.13) that includes the unadjusted trial balance, the March 31 adjustments (a) through (g), and the adjusted trial balance. Do not prepare closing entries and do not journalize the adjustments or post them to the ledger. BUSINESS SOLUTIONS Partial Work Sheet March 31, 2020 Unadjusted Trial Balance Adjustments Adjusted Trial Balance No. Account Title Dr. Cr. Dr. Cr. Dr. Cr. 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 depreciationOffice equipment 167 Computer equipment 168 Accumulated depreciationComputer 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 Depreciation expenseComputer equipment 613 623 Wages expense 637 Insurance expense 640 Rent expense 652 Computer supplies expense 655 Advertising expense 676 Mileage expense Miscellaneous expenses 677 684 Repairs expenseComputer Totals 0 0 0 0 0 0 BUSINESS SOLUTIONS Income Statement For Three Months Ended March 31, 2020 Revenues Total revenues Expenses Total expenses BUSINESS SOLUTIONS Income Statement For Three Months Ended March 31, 2020 Net sales Expenses Selling expenses Total selling expenses General and administrative expenses Total general and administrative expenses Total expenses 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