SP 5 Santana Rey created Business Solutions on October 1, 2011. 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, 2011. 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 $ 48,532 106.1 Alexs Engineering Co. 0 106.2 Wildcat Services 0 106.3 Easy Leasing 0 106.4 IFM Co. 3,090 106.5 Liu Corp. 0 106.6 Gomez Co. 2,678 106.7 Delta Co. 0 106.8 KC, Inc. 0 106.9 Dream, Inc. 0 119 Merchandise inventory 0 126 Computer supplies 700 128 Prepaid insurance 1,725 131 Prepaid rent 885 163 Office equipment 8,150 164 Accumulated depreciationOffice equipment $ 380 167 Computer equipment 21,100 168 Accumulated depreciationComputer equipment 1,190 201 Accounts payable 1,250 210 Wages payable $ 540 236 Unearned computer services revenue 1,490 307 Common stock 74,810 318 Retained earnings 7,200 319 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, 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. Also, Business Solutions does not use reversing entries and, therefore, all revenue and expense accounts have zero beginning balances as of January 1, 2012. 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 $24,400 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 $2,678 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 $5,360, which is the total price of $6,850 less the advance payment of $1,490. 13 The company sold merchandise with a retail value of $4,100 and a cost of $3,430 to Liu Corp., invoice dated January 13. 15 The company paid $730 cash for freight charges on the merchandise purchased on January 7. 16 The company received $4,050 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 $700 of defective merchandise from its invoice dated January 13. The returned merchandise, which had a $270 cost, is discarded. (The policy of Business Solutions 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 $476. 26 The company purchased $9,100 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 $4,610 cost for $5,900 on credit to KC, Inc., invoice dated January 26. 29 The company received a $476 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 $135 per day. Feb. 1 The company paid $2,655 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 $476 amount in the credit memorandum. 5 The company paid $560 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 $4,760 cash for dividends. 23 The company sold merchandise with a $2,610 cost for $3,260 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 for business automobile mileage (1,000 miles at $0.15 per mile). Mar. 8 The company purchased $2,730 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 $860 cash for minor repairs to the companys computer. 16 The company received $5,350 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 $1,250) and March 8. 24 The company billed Easy Leasing for $9,237 of computing services provided. 25 The company sold merchandise with a $2,192 cost for $2,940 on credit to Wildcat Services, invoice dated March 25. 30 The company sold merchandise with a $1,108 cost for $2,240 on credit to IFM Company, invoice dated March 30. 31 The company reimbursed Santana Rey for business automobile mileage (1,100 miles at $0.15 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 $2,045. b. Three more months have expired since the company purchased its annual insurance policy at a $2,300 cost for 12 months of coverage. c. Lyn Addie has not been paid for seven days of work at the rate of $135 per day. d. Three months have passed since any prepaid rent has been transferred to expense. The monthly rent expense is $885. e. Depreciation on the computer equipment for January 1 through March 31 is $1,190. 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 $554. Required: 1. Prepare journal entries to record each of the January through March transactions. (In cases where no entry is required, please select the option "No journal entry required" for your answer to grade correctly. Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Round your final answers to the nearest dollar amount. Omit the "$" sign in your response.) Date General Journal Debit Credit Jan. 4 5 7 9 11 13 13 15 16 17 20 22 24 26 26 26 29 31 Feb. 1 3 5 11 15 23 23 26 27 Mar. 8 9 11 16 19 24 25 25 30 30 31 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, 2011.) (Do not round intermediate calculations. Round your final answers to the nearest dollar amount. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.) General Ledger Accounts Cash Acct. No. 101 Date Debit Credit Balance Dec. 31 Jan. 4 5 9 15 16 17 22 31 Feb. 1 3 5 11 15 26 27 Mar. 9 11 16 19 31 Accounts ReceivableAlexs Engineering Co. Acct. No. 106.1 Date Debit Credit Balance Dec. 31 Jan. 11 Feb. 11 Accounts ReceivableWildcat Services Acct. No. 106.2 Date Debit Credit Balance Dec. 31 Mar. 25 Accounts ReceivableEasy Leasing Acct. No. 106.3 Date Debit Credit Balance Dec. 31 Mar. 24 Accounts ReceivableIFM Co. Acct. No. 106.4 Date Debit Credit Balance Dec. 31 Mar. 30 Accounts ReceivableLiu Corporation Acct. No. 106.5 Date Debit Credit Balance Dec. 31 Jan. 13 20 22 Accounts ReceivableGomez Co. Acct. No. 106.6 Date Debit Credit Balance Dec. 31 9 Accounts ReceivableDelta Co. Acct. No. 106.7 Date Debit Credit Balance Dec. 31 Feb. 23 Mar. 9 Accounts ReceivableKC, Inc. Acct. No. 106.8 Date Debit Credit Balance Dec. 31 Jan. 26 Accounts ReceivableDream, Inc. Acct. No. 106.9 Date Debit Credit Balance Dec. 31 Merchandise Inventory Acct. No. 119 Date Debit Credit Balance Dec. 31 Jan. 7 13 15 17 24 26 26 Feb. 3 23 Mar. 25 30 Computer Supplies Acct. No. 126 Date Debit Credit Balance Dec. 31 Mar. 8 Prepaid Insurance Acct. No. 128 Date Debit Credit Balance Dec. 31 Prepaid Rent Acct. No. 131 Date Debit Credit Balance Dec. 31 Feb. 1 Office Equipment Acct. No. 163 Date Debit Credit Balance Dec. 31 Accumulated DepreciationOffice Equipment Acct. No. 164 Date Debit Credit Balance Dec. 31 Computer Equipment Acct. No. 167 Date Debit Credit Balance Dec. 31 Accumulated DepreciationComputer Equipment Acct. No. 168 Date Debit Credit Balance Dec. 31 Accounts Payable Acct. No. 201 Date Debit Credit Balance Dec. 31 Jan. 7 17 24 26 Feb. 3 Mar. 8 19 Wages Payable Acct. No. 210 Date Debit Credit Balance Dec. 31 Jan. 4 Unearned Computer Services Revenue Acct. No. 236 Date Debit Credit Balance Dec. 31 Jan. 11 Common Stock Acct. No. 301 Date Debit Credit Balance Dec. 31 Jan. 5 Retained Earnings Acct. No. 318 Date Debit Credit Balance Dec. 31 Dividends Acct. No. 319 Date Debit Credit Balance Feb. 15 Computer Services Revenue Acct. No. 403 Date Debit Credit Balance Jan. 11 16 Mar. 16 24 Sales Acct. No. 413 Date Debit Credit Balance Jan. 13 26 Feb. 23 Mar. 25 30 Sales Returns and Allowances Acct. No. 414 Date Debit Credit Balance Jan. 20 Sales Discounts Acct. No. 415 Date Debit Credit Balance Jan. 22 Cost of Goods Sold Acct. No. 502 Date Debit Credit Balance Jan. 13 26 Feb. 23 Mar. 25 30 Depreciation ExpenseOffice Equipment Acct. No. 612 Date Debit Credit Balance Depreciation ExpenseComputer Equipment Acct. No. 613 Date Debit Credit Balance Wages Expense Acct. No. 623 Date Debit Credit Balance Jan. 4 31 Feb. 26 Insurance Expense Acct. No. 637 Date Debit Credit Balance Rent Expense Acct. No. 640 Date Debit Credit Balance Computer Supplies Expense Acct. No. 652 Date Debit Credit Balance Advertising Expense Acct. No. 655 Date Debit Credit Balance Feb. 5 Mileage Expense Acct. No. 676 Date Debit Credit Balance Feb. 27 Mar. 31 Miscellaneous Expenses Acct. No. 677 Date Debit Credit Balance Repairs ExpenseComputer Acct. No. 684 Date Debit Credit Balance Mar. 11 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. Do not prepare closing entries and do not journalize the adjustments or post them to the ledger. (Do not round intermediate calculations. Round your final answers to the nearest dollar amount. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.) BUSINESS SOLUTIONS Partial Work Sheet March 31, 2012 Unadjusted Trial Balance Adjustments Adjusted Trial Balance Acct. No. Account Title Dr. Cr. Dr. Cr. Dr. Cr. 101 Cash 106.1 Alexs Engineering Co. 106.2 Wildcat Services 106.3 Easy Leasing 106.4 IFM Co. 106.5 Liu Corporation 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 equip. 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 expenseOffice equipment 613 Depreciation expenseComputer 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 expenseComputer Totals 4. Prepare an income statement (from the adjusted trial balance in part 3) for the three months ended March 31, 2012. Use a single-step format. List all expenses without differentiating between selling expenses and general and administrative expenses. (Do not round intermediate calculations. Round your final answers to the nearest dollar amount. Input all amounts as positive values. Omit the "$" sign in your response.) BUSINESS SOLUTIONS Income Statement For Three Months Ended March 31, 2012 Revenues $ Total revenues Expenses $ Total expenses $ 5. Prepare a statement of retained earnings (from the adjusted trial balance in part 3) for the three months ended March 31, 2012. (Do not round intermediate calculations. Round your final answers to the nearest dollar amount. Input all amounts as positive values. Omit the "$" sign in your response.) BUSINESS SOLUTIONS Statement of Retained Earnings For Three Months Ended March 31, 2012 $ $ 6. Prepare a classified balance sheet (from the adjusted trial balance) as of March 31, 2012. (Be sure to list the assets and liabilities in order of their liquidity. Amounts to be deducted should be indicated with minus sign. Do not round intermediate calculations. Round your final answers to the nearest dollar amount. Omit the "$" sign in your response.) BUSINESS SOLUTIONS Balance Sheet December 31, 2011 Assets Current Assets $ Total Current Assets Plant Assets $ Total Plant Assets Total Assets $ Liabilities Current Liabilities $ Equity Total equity Total Liabilities and Equity $