SP 5 Serial Problem Business Solutions (Algo) LO P1, P2, P3, P4 [The following information applies to the questions displayed below.] 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. Number 101 Cash 106.1 Account Title Alex's Engineering Company 106.2 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 106.9 119 126 Dream, Incorporated Computer supplies Merchandise inventory 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 Santana Rey, Capital 382 Santana Rey, withdrawals 403 Computer services revenue 413 Sales 414 415 Sales discounts 502 612 613 623 637 640 652 655 676 677 Sales returns and allowances Cost of goods sold Depreciation expense-office equipment Depreciation expense-Computer equipment Wages expense Insurance expense Rent expense Computer supplies expense Advertising expense Mileage expense Miscellaneous expenses 684 Repairs expense-Computer Debit Credit $ 48,532 e 3,110 2,688 B 650 2,016 865 8,060 $ 400 21,900 6 6 6 6 6 6 6 6 6 6 0 B 1,240 1,240 580 1,390 82,971 In response to requests from customers, Santana Rey will begin selling computer software. The company will extend credit terms of 1/10, n/38, FOB shipping point, to all customers who purchase this merchandise. However, no cash discount is available on consulting fees. Additional accounts (Numbers 119, 413, 414, 415, and 582) are added to its general ledger to accommodate the company's new merchandising activities. Its transactions for January through March follow. January 4 The company paid cash to Lyn Addie for five days' work at the rate of $145 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 $24,880 cash in the company. January 7 The company purchased $6,188 of merchandise from Kansas Corporation with terms of 1/10, n/38, FOB shipping point, invoice dated January 7. January 9 January 11 The company received $2,688 cash from Gomez Company as full payment on its account. The company completed a five-day project for Alex's Engineering Company and billed it $5,470, which is the total price of $6,860 less the advance payment of $1,390. The company debited Unearned Computer Services Revenue for $1,390. January 13 The company sold merchandise with a retail value of $4,400 and a cost of $3,530 to Liu Corporation, invoice dated January 13. January 15 The company paid $680 cash for freight charges on the merchandise purchased on January 7. January 16 The company received $4,000 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 $688 to Liu Corporation and credited Liu's accounts receivable for that amount. January 22 January 24 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 $476. January 26 The company purchased $9,188 of merchandise from Kansas Corporation with terms of 1/10, n/38, FOB destination, invoice dated January 26. January 26 The company sold merchandise with a $4,560 cost for $5,920 on credit to KC, Incorporated, invoice dated January 26. January 31 The company paid cash to Lyn Addie for 10 days' work at $145 per day. February 1 The company paid $2,595 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 $476 credit from merchandise returned on January 24. February 5 The company paid $470 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 Santana Rey withdrew $4,620 cash from the company for personal use. February 23 The company sold merchandise with a $2,488 cost for $3,320 on credit to Delta Company, invoice dated February 23. February 26 The company paid cash to Lyn Addie for eight days' work at $145 per day. February 27 The company reimbursed Santana Rey $384 cash for business automobile mileage. The company recorded the reimbursement as "Mileage Expense." March 8 The company purchased $2,988 of computer supplies from Harris Office Products on credit with terms of n/30, FOB destination, invoice dated March 8. March 9 The company received the balance due from Delta Company for merchandise sold on February 23. March 11 The company paid $790 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 $4,140 to Harris office Products, consisting of amounts created on December 15 (of $1,240) and March 8. March 24 The company billed Easy Leasing for $9,137 of computing services provided. March 25 The company sold merchandise with a $2,162 cost for $2,888 on credit to wildcat Services, invoice dated March 25. March 30 The company sold merchandise with a $1,178 cost for $2,310 on credit to IFM Company, invoice dated March 30. March 31 The company reimbursed Santana Rey $352 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 $2,165. b. Prepaid Insurance coverage of $672 expired during this three-month period. c. Lyn Addie has not been paid for seven days of work at the rate of $145 per day. d. Prepaid rent of $2,595 expired during this three-month period. e. Depreciation on the computer equipment for January 1 through March 31 is $1,240. f. Depreciation on the office equipment for January 1 through March 31 is $400. g. The March 31 amount of merchandise inventory still available totals $674. Number Account Title BUSINESS SOLUTIONS Partial Work Sheet March 31, 2022 Unadjusted Trial Balance Debit Credit 101 Cash 106.1 Alex's Engineering Company 106.2 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 106.9 119 Dream, Incorporated Merchandise Inventory 126 Computer supplies 128 Prepaid Insurance 131 Prepaid rent 163 164 167 168 Office equipment Accumulated depreciation-office equipment Computer equipment 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 415 502 612 613 623 637 Sales discounts Cost of goods sold Depreciation expense-Office equipment Depreciation expense-Computer equipment Wages expense Insurance expense 640 Rent expense 652 Computer supplies expense 655 Advertising expense 676 Mileage expense 677 Miscellaneous expenses 684 Repairs expense-Computer Totals Adjustments Debit Adjusted Trial Balance Credit Debit Credit 4. Prepare an income statement (from the adjusted trial balance in part 3) for the three months ended March 31, 2022 (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, 2022. (a) Use a single-step format. List all expenses without differentiating between selling expenses and general and administrative expenses. BUSINESS SOLUTIONS Income Statement For Three Months Ended March 31, 2022 Revenues Total revenues Expenses Total expenses < Required 4A Required 4B > 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, 2022. (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 A Net sales Expenses Selling expenses BUSINESS SOLUTIONS Income Statement For Three Months Ended March 31, 2022 Total selling expenses General and administrative expenses Total general and administrative expenses Total expenses 0 0 0 0 0 0 S 0 < Required 4A Required 4B >