(The following information applies to the questions displayed below.) Santana Rey created Business Solutions on October 1, 2017. 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, 2017. 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. Credit Debit $48, 492 3,180 2,678 610 2,043 895 8,150 164 $ 220 21,600 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 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 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 1,150 1,160 980 1,410 82,728 415 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. Also, Business Solutions does not use reversing entries and, therefore, all revenue and expense accounts have zero beginning balances as of January 1, 2018. Its transactions for January through March follow: Jan. 4 The company paid cash to Lyn Addie for five days' work at the rate of $245 per day. Four of the five days relate to wages payable that were accrued in the prior year. 5 Santana Rey invested an additional $24,600 cash in the company. 7 The company purchased $7,000 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 Alex's Engineering Co. and billed it $5,420, which is the total price of $6,830 less the advance payment of $1,410. 13 The company sold merchandise with a retail value of $4,200 and a cost of $3,400 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 $4,190 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 $500 of defective merchandise from its invoice dated January 13. The returned merchandise, which had a $290 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 $486. 26 The company purchased $9,400 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 $5,860 on credit to KC, Inc., invoice dated January 26. 31 The company paid cash to Lyn Addie for 10 days' work at $245 per day. Feb. 1 The company paid $2,685 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 $486 amount in the credit memorandum. 5 The company paid $510 cash to the local newspaper for an advertising insert in today's paper. 11 The company received the balance due from Alex's Engineering Co. for fees billed on January 11. 15 Santana Rey withdrew $4,740 cash from the company for personal use. 23 The company sold merchandise with a $2,510 cost for $3,300 on credit to Delta Co., invoice dated February 23. 26 The company paid cash to Lyn Addie for eight days' work at $245 per day. 27 The company reimbursed Santana Rey for business automobile mileage (1,100 miles at $0.32 per mile). Mar. mile). 8 The company purchased $2,760 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 company's computer. 16 The company received $5,420 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 $1,160) and March 8. 24 The company billed Easy Leasing for $9,147 of computing services provided. 25 The company sold merchandise with a $2,172 cost for $2,880 on credit to Wildcat Services, invoice dated March 25. 30 The company sold merchandise with a $1,068 cost for $2,310 on credit to IFM Company, invoice dated March 30. 31 The company reimbursed Santana Rey for business automobile mileage (1,000 miles at $0.32 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 $2,185. b. Three more months have expired since the company purchased its annual insurance policy at a $2,724 cost for 12 months of coverage. c. Lyn Addie has not been paid for seven days of work at the rate of $245 per day. d. Three months have passed since any prepaid rent has been transferred to expense. The monthly rent expense is $895. e. Depreciation on the computer equipment for January 1 through March 31 is $1,150. f. Depreciation on the office equipment for January 1 through March 31 is $220. g. The March 31 amount of merchandise inventory still available totals $534. 100 486 21-Jan Accounts Payable Merchandise Inventory 201 119 486 101 102 119 9400 103 104 26-Jan Merchandise Inventory Accounts Payable 201 9400 105 106 5860 26-Jan Accounts ReceivableKC, Inc Sales 106.8 413 107 108 5860 4640 109 110 26-Jan Cost of Goods Sold Merchandise Inventory 502 119 4640 2450 623 101 2450 131 2,685 118 2685 114 31-Jan Wages expense 115 Cash 116 1171-Feb Prepaid Rent Cash 119 120 3-Feb Accounts Payable Merchandise Inventory Cash 123 124 5-Feb Advertising Expense Cash 8914 121 122 101 94 8820 510 655 101 510 125 126 127 5420 11-Feb Cash Accounts ReceivableAlex's Eng. Co 101 106.1 128 5420 302 101 4,740 129 130 131 132 133 134 15-Feb S. Rey. Withdrawls Cash 4740 23-Feb Accounts Receivable-Delta Co Sales 106.7 413 3300 3300 135 502 136 137 23-Feb Cost of Goods Sold Merchandise Inventory 2510 119 2510 623 1960 139 26-Feb Wages expense 140 Cash 101 1960 141 27-Feb Mileage Expense Cash 676 101 352 352 142 143 144 145 146 126 8-Mar Computer Supplies Accounts Payable 201 2760 147 101 106.7 3300 860 684 101 860 148 9-Mar Cash 149 Accounts Receivable-Delta Co 150 151 11-Mar Repairs Expense-Computer 152 Cash 153 154 16 Mar Cash 155 Computer Services Revenue 156 157 19-Mar Accounts Payable Cash 101 403 5420 201 101 3920 158 3920 159 160 24-Mar Accounts Receivable-Easy Leasing Computer Services Revenue 106.3 403 9147 161 9147 162 163 164 2880 25-Mar Accounts Receivable-Wildcat Services Sales 1062 413 2880 166 2172 Cost of Goods Sold Merchandise Inventory 502 119 2172 167 168 169 170 171 30-Mar Accounts ReceivableIFM Co Sales 2310 106.4 413 2310 172 502 119 1068 Cost of Goods Sold Merchandise Inventory 173 1068 174 175 176 31-Mar Mileage Expense Cash 676 320 101 320 13:29 Credit Date Account Title & explanation 4-Jan Wages expense Wages payable Cash Ref. Debit 623245 210980 101 1225 5-Jan Cash 101 307 24600 S.Rey Capital 24600 119 7000 7-Jan Merchandise Inventory Accounts Payable 201 7000 9-Jan Cash Accounts Receivable-Gomez Co 101 1066 2678 2678 11 Jan Accounts Receivable-Alex's Eng Co Unearned Computer Services Revenue Computer Services Revenue 106.1 236 5420 1410 403 6830 Liu Corp 106.5 13-Jan Accounts Receivable Sales 4,200 413 4200 13-Jan Cost of Goods Sold Merchandise Inventory 502 119 3400 3400 15-Jan Merchandise Inventory Cash 730 730 16-Jan Cash 4190 Computer Services Revenue 403 4190 201 7000 17-Jan Accounts Payable Merchandise Inventory Cash 119 101 70 6930 500 20-Jan Sales Returns and Allowances Accounts Receivable Liu Corp 414 106.5 500 101 3663 22-Jan Cash Sales Discount Accounts Receivable-Liu Corp 415 37 106.5 3700 24-Jan Accounts Payable Merchandise Inventory 201 119 486 486 9400 26-Jan Merchandise Inventory Accounts Payable 119 201 9400 26-Jan Accounts ReceivableKC, Inc Sales 106.8 413 5860 5860 26-Jan Cost of Goods Sold Merchandise Inventory 502 119 4640 4640 2450 31-Jan Wages expense Cash 2450 623 101 131 2685 1-Feb Prepaid Rent Cash 101 2685 8914 3-Feb Accounts Payable Merchandise Inventory Cash 201 119 94 8820 101 510 5-Feb Advertising Expense Cash 655 101 510 5420 11-Feb Cash Accounts Receivable-Alex's Eng. Co 101 106.1 5420 302 4740 15-Feb S. Rey. Withdrawis Cash 101 4740 106.7 3300 23-Feb Accounts ReceivableDelta Co Sales 3300 2. Post the journal entries in part 1 to the accounts in the company's general ledger. (Note: Begin with the le closing adjusted balances as of December 31, 2017.) (Record the transactions in the order presented. Dor rows.) 101 Cash Debit Credit 106.1 Accounts Receivable-Alex's Engineering Co. Date Debit Credit Balance Dec. 31 Balance Date Dec. 31 106.2 Accounts Receivable-Wildcat Services Date / Debit Credit Balance Dec. 31 106.3 Accounts Receivable-Easy Leasing Date Debit Credit Balance Dec. 31 106.4 Accounts Receivable-IFM Co. Date Debit Credit Balance Dec. 31 106.5 Accounts Receivable Liu Corporation Date Debit Credit Balance Dec. 31 106.6 Accounts Receivable-Gomez Co. Date Debit Credit Balance Dec. 31 106.7 Accounts Receivable-Delta Co. Date Debit Credit Balance Dec. 31 (The following information applies to the questions displayed below.) Santana Rey created Business Solutions on October 1, 2017. 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, 2017. 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. Credit Debit $48, 492 3,180 2,678 610 2,043 895 8,150 164 $ 220 21,600 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 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 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 1,150 1,160 980 1,410 82,728 415 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. Also, Business Solutions does not use reversing entries and, therefore, all revenue and expense accounts have zero beginning balances as of January 1, 2018. Its transactions for January through March follow: Jan. 4 The company paid cash to Lyn Addie for five days' work at the rate of $245 per day. Four of the five days relate to wages payable that were accrued in the prior year. 5 Santana Rey invested an additional $24,600 cash in the company. 7 The company purchased $7,000 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 Alex's Engineering Co. and billed it $5,420, which is the total price of $6,830 less the advance payment of $1,410. 13 The company sold merchandise with a retail value of $4,200 and a cost of $3,400 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 $4,190 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 $500 of defective merchandise from its invoice dated January 13. The returned merchandise, which had a $290 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 $486. 26 The company purchased $9,400 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 $5,860 on credit to KC, Inc., invoice dated January 26. 31 The company paid cash to Lyn Addie for 10 days' work at $245 per day. Feb. 1 The company paid $2,685 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 $486 amount in the credit memorandum. 5 The company paid $510 cash to the local newspaper for an advertising insert in today's paper. 11 The company received the balance due from Alex's Engineering Co. for fees billed on January 11. 15 Santana Rey withdrew $4,740 cash from the company for personal use. 23 The company sold merchandise with a $2,510 cost for $3,300 on credit to Delta Co., invoice dated February 23. 26 The company paid cash to Lyn Addie for eight days' work at $245 per day. 27 The company reimbursed Santana Rey for business automobile mileage (1,100 miles at $0.32 per mile). Mar. mile). 8 The company purchased $2,760 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 company's computer. 16 The company received $5,420 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 $1,160) and March 8. 24 The company billed Easy Leasing for $9,147 of computing services provided. 25 The company sold merchandise with a $2,172 cost for $2,880 on credit to Wildcat Services, invoice dated March 25. 30 The company sold merchandise with a $1,068 cost for $2,310 on credit to IFM Company, invoice dated March 30. 31 The company reimbursed Santana Rey for business automobile mileage (1,000 miles at $0.32 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 $2,185. b. Three more months have expired since the company purchased its annual insurance policy at a $2,724 cost for 12 months of coverage. c. Lyn Addie has not been paid for seven days of work at the rate of $245 per day. d. Three months have passed since any prepaid rent has been transferred to expense. The monthly rent expense is $895. e. Depreciation on the computer equipment for January 1 through March 31 is $1,150. f. Depreciation on the office equipment for January 1 through March 31 is $220. g. The March 31 amount of merchandise inventory still available totals $534. 100 486 21-Jan Accounts Payable Merchandise Inventory 201 119 486 101 102 119 9400 103 104 26-Jan Merchandise Inventory Accounts Payable 201 9400 105 106 5860 26-Jan Accounts ReceivableKC, Inc Sales 106.8 413 107 108 5860 4640 109 110 26-Jan Cost of Goods Sold Merchandise Inventory 502 119 4640 2450 623 101 2450 131 2,685 118 2685 114 31-Jan Wages expense 115 Cash 116 1171-Feb Prepaid Rent Cash 119 120 3-Feb Accounts Payable Merchandise Inventory Cash 123 124 5-Feb Advertising Expense Cash 8914 121 122 101 94 8820 510 655 101 510 125 126 127 5420 11-Feb Cash Accounts ReceivableAlex's Eng. Co 101 106.1 128 5420 302 101 4,740 129 130 131 132 133 134 15-Feb S. Rey. Withdrawls Cash 4740 23-Feb Accounts Receivable-Delta Co Sales 106.7 413 3300 3300 135 502 136 137 23-Feb Cost of Goods Sold Merchandise Inventory 2510 119 2510 623 1960 139 26-Feb Wages expense 140 Cash 101 1960 141 27-Feb Mileage Expense Cash 676 101 352 352 142 143 144 145 146 126 8-Mar Computer Supplies Accounts Payable 201 2760 147 101 106.7 3300 860 684 101 860 148 9-Mar Cash 149 Accounts Receivable-Delta Co 150 151 11-Mar Repairs Expense-Computer 152 Cash 153 154 16 Mar Cash 155 Computer Services Revenue 156 157 19-Mar Accounts Payable Cash 101 403 5420 201 101 3920 158 3920 159 160 24-Mar Accounts Receivable-Easy Leasing Computer Services Revenue 106.3 403 9147 161 9147 162 163 164 2880 25-Mar Accounts Receivable-Wildcat Services Sales 1062 413 2880 166 2172 Cost of Goods Sold Merchandise Inventory 502 119 2172 167 168 169 170 171 30-Mar Accounts ReceivableIFM Co Sales 2310 106.4 413 2310 172 502 119 1068 Cost of Goods Sold Merchandise Inventory 173 1068 174 175 176 31-Mar Mileage Expense Cash 676 320 101 320 13:29 Credit Date Account Title & explanation 4-Jan Wages expense Wages payable Cash Ref. Debit 623245 210980 101 1225 5-Jan Cash 101 307 24600 S.Rey Capital 24600 119 7000 7-Jan Merchandise Inventory Accounts Payable 201 7000 9-Jan Cash Accounts Receivable-Gomez Co 101 1066 2678 2678 11 Jan Accounts Receivable-Alex's Eng Co Unearned Computer Services Revenue Computer Services Revenue 106.1 236 5420 1410 403 6830 Liu Corp 106.5 13-Jan Accounts Receivable Sales 4,200 413 4200 13-Jan Cost of Goods Sold Merchandise Inventory 502 119 3400 3400 15-Jan Merchandise Inventory Cash 730 730 16-Jan Cash 4190 Computer Services Revenue 403 4190 201 7000 17-Jan Accounts Payable Merchandise Inventory Cash 119 101 70 6930 500 20-Jan Sales Returns and Allowances Accounts Receivable Liu Corp 414 106.5 500 101 3663 22-Jan Cash Sales Discount Accounts Receivable-Liu Corp 415 37 106.5 3700 24-Jan Accounts Payable Merchandise Inventory 201 119 486 486 9400 26-Jan Merchandise Inventory Accounts Payable 119 201 9400 26-Jan Accounts ReceivableKC, Inc Sales 106.8 413 5860 5860 26-Jan Cost of Goods Sold Merchandise Inventory 502 119 4640 4640 2450 31-Jan Wages expense Cash 2450 623 101 131 2685 1-Feb Prepaid Rent Cash 101 2685 8914 3-Feb Accounts Payable Merchandise Inventory Cash 201 119 94 8820 101 510 5-Feb Advertising Expense Cash 655 101 510 5420 11-Feb Cash Accounts Receivable-Alex's Eng. Co 101 106.1 5420 302 4740 15-Feb S. Rey. Withdrawis Cash 101 4740 106.7 3300 23-Feb Accounts ReceivableDelta Co Sales 3300 2. Post the journal entries in part 1 to the accounts in the company's general ledger. (Note: Begin with the le closing adjusted balances as of December 31, 2017.) (Record the transactions in the order presented. Dor rows.) 101 Cash Debit Credit 106.1 Accounts Receivable-Alex's Engineering Co. Date Debit Credit Balance Dec. 31 Balance Date Dec. 31 106.2 Accounts Receivable-Wildcat Services Date / Debit Credit Balance Dec. 31 106.3 Accounts Receivable-Easy Leasing Date Debit Credit Balance Dec. 31 106.4 Accounts Receivable-IFM Co. Date Debit Credit Balance Dec. 31 106.5 Accounts Receivable Liu Corporation Date Debit Credit Balance Dec. 31 106.6 Accounts Receivable-Gomez Co. Date Debit Credit Balance Dec. 31 106.7 Accounts Receivable-Delta Co. Date Debit Credit Balance Dec. 31
