The Rachel's Enterprises Solutions had the following balance sheet as of December 31, 2020. The transactions for the first three months of 2021 are also presented along with other information about specific accounts.

Rachel's Enterprises Solutions Incorporated

Balance Sheet

December 31, 2020

ASSETS			LIABILITIES
Cash	$ 37,000		Accounts Payable	$ 40,000
Marketable Securities	10,000		Wages Payable	10,800
Accounts Receivable	63,000		Taxes Payable	7,200
Uncollectible Accounts	-2,000		Short-Term Note Payable	30,000
Inventory	74,000		Interest Payable	2000
Supplies	4,000		Unearned Revenue	20,000
Prepaid Insurance	7,500		Unearned Consulting Rev.	5,000
Total Current Assets	$193,500		Total Current Liabilities	$ 115,000
Land	$111,500		Long-Term Notes Payable	$ 50,000
Equipment	217,000		Bonds Payable	100,000
Accumulated Depreciation	-97,000		Mortgage Payable	350,000
Building	590,000		Total Long-Term Liabilities	$500,000
Accumulated Depreciation	-110,000
Intangible Assets	60,000		STOCKHOLDER EQUITY
Total Long-Term Assets	$771,150		Capital Stock	$100,000
			Paid in Capital	140,000
			Retained Earnings	110,000
			Total Stockholders Equity	$350,000
Total Assets	$965,000		Total Liabilities & Equity	$965,000

Additional Information

Accounts Receivable

The following table indicates the historical breakout of accounts receivable

Days	Current	30 to 60	60 to 90	Over 90
Percent of Balance	50%	30%	15%	5%
Percent Collectible	95%	90%	80%	60%

The company uses the gross method of recording all sales on accounts.

Marketable Securities

The interest rate earned on marketable securities is 7.0%.

Inventory

In 202x, the company had used the gross method to record inventory purchases on account.

Prepaid Insurance

A three-year insurance policy in the amount of $9,000 was purchased on July 1, 2020.

Equipment

Equipment is depreciated at an average amount of $3,500 per month.

Building

The current building was purchased on January 1, ten years ago and has an expected 40-year life at which time its salvage value will be $40,000.

Intangible Assets

Intangible assets were initially valued at $60,000 and are being depreciated over 30 years at $2,000 per year.

Short-Term Notes Payable

The one-year short-term note payable is due on March 1, 2021. The interest rate is 8.0% which is payable at maturity.

Long-Term Notes Payable

The long-term notes payable are due in ten years. The interest rate on the notes is 5.0%.

Bonds Payable

The bonds payable mature in twenty years. The interest rate on the bonds is 5.0%.

Mortgage Payable

The following amortization schedule can be used for the January, 2021 mortgage payment on the 4.0%, 30- year mortgage.

Month	Payment	Interest	Principal	Balance
January	$3,500	$2,063	$1,437	000 563
February	$3,500	$2,063	$1,437	$317,126
March	$3,500	$2,063	$1,437	$315,689

Capital Stock

The capital stock is common stock at $10 par value with 50,000 shares authorized, and 10,000 shares issued and outstanding.

Journal Entries

1. Rachel invested $40,000 cash into the business by purchasing capital stock at $10.00 par value.
2. Jan 2 The Company borrowed $60,000 on a short-term 90 day, 4.0% note payable.
3. Jan 3 The Company paid $30,000 in advance for the 12 month rental of a warehouse.
4. Jan 5 Rachel's Enterprises Board of Directors declared a dividend of $.75 cents per share payable on February 10, 2021 to all shareholders of record on January 20, 2021.
5. Jan 6 The amount in wages payable and taxes payable was paid in full.
6. Jan 8 The Company paid a total of $30,000 on accounts payable less the 2% in purchase discounts for early payment.
7. Jan 15 Cash sales for two weeks equaled $38,000. The cost of inventory sold equaled $16,000.
8. Jan 18 Consulting services revenue during the first two week was $10,000 cash. Please use Consulting Service Revenue.
9. Jan 20 Supplies in the amount of $4,500 were purchased for cash.

(10) Jan 21 A customer who owed $25,000 on an account receivable, agreed to sign a 60-day note receivable with an interest rate of 6.0%. The interest earned on the note will be paid at the maturity date of the note receivable.

(11) Jan 29 The balance of $10,000 in accounts payable was paid.

(12) Jan 30 The Company purchased $60,000 of inventory on account with the terms 2/10, net 30.

(13) Jan 30 The Company paid freight charges of $1,800 on the inventory purchase.

(14) Jan 31 Cash sales for two weeks equaled $28,000. The cost of inventory sold equaled $13,000.

(15) Jan 31 Sales on account for the month of January totaled $62,000 with the terms 2/10, net 30. The cost of inventory sold equaled $29,000.

(16) Jan 31 The unearned revenue represented the rental of special equipment that was used by another company on weekends. $4,000 of the revenue was earned in January.

(17) Jan 31 Collected cash of $49,000 from the accounts receivable, plus there was a total sales discount of $1,000 for the payment of receivables within the ten day discount period.

(18) Jan 31 Salary expenses in the amount of $12,000 and tax expenses in the amount of $5,000 were paid.

(19) Jan 31 The Company paid a repair bill of $6,000 was paid.

(20) Jan 31 A bill in the amount of $2,500 for advertising expenses incurred during the month of January was received.

(21) Jan 31 The monthly payment for January of the mortgage payable was made.

(22) Jan 31 Consulting services on account for the month were $15,000. Included in this amount was $5,000 advanced payment previously received in the unearned consulting revenue account.

(23) Jan 31 In order to make a sale the company paid $1,200 to have goods shipped to a customer.

(24) Feb 1 The Company made a new issue of 5,000 shares of $10.00 par value common stock for cash. The market price of the stock was $30 per share.

(25) Feb 2 A petty cash fund in the amount of $800 was established.

(26) Feb 3 The Company bought back 1,000 shares of its own common stock for $20 per share and reports the purchase as treasury stock.

(27) Feb 8 The purchase of inventory on account on Jan 30th which was reported at the gross amount was paid in full less the discount.

(28) Feb 10 The dividend declared on January 5th was paid.

(29) Feb 15 Cash sales for two weeks equaled $21,000. The cost of inventory sold equaled $9,500.

(30) Feb 15 Consulting services for cash for two weeks was $20,000.

(31) Feb 20 The Company purchases $31,000 of inventory on account with the terms 2/10, net 30.

(32) Feb 20 The Company paid freight charges of $900 for the inventory purchase.

(33) Feb 27 The Company paid an advertising bill for $6,500 which included the February advertising expense of $4,000 plus the balance due from January.

(34) Feb 28 Cash sales for two weeks equaled $32,000. The cost of inventory sold equaled $15,000.

(35) Feb 28 Consulting services for the on credit for the two weeks totaled $22,000.

(36) Feb 28 The monthly payment for February of the mortgage payable was made.

(37) Feb 28 The Company collected cash on the accounts receivables for a payment of $70,000 less a total sales discount of $1,400 for the payment of receivables within the ten day discount period.

(38) Feb 28 Salary expenses in the amount of $18,000 and tax expenses in the amount of $6,000 were paid.

(39) Feb 28 The Company paid a property tax bill of $4,100.

(40) Feb 28 Sales on account for the month of February totaled $75,000 with the terms 2/10, net 30. The cost of inventory sold equaled $33,800.

(41) Feb 28 A customer complained that some of the goods they received were damaged. So Rachel's gave them an allowance of $1,700 to keep the customer satisfied.

(42) Mar 1 The short-term note payable of $30,000 that was due on March 1st plus all appropriate interest was paid.

(43) Mar 3 The amount of the petty cash fund was increased by $700.

(44) Mar 10 Supplies in the amount of $3,900 were purchased on account.

(45) Mar 15 Cash sales for two weeks equaled $23,000. The cost of inventory sold equaled $11,600.

(46) Mar 15 The consulting service revenue for cash for two weeks totaled $17,000.

(47) Mar 20 The Company reissued 300 shares of its own treasury stock for $30 per share.

(48) Mar 21 The note receivable from January 21st had been paid in full plus interest.

(49) Mar 25 The Company purchased $51,000 of inventory on account using the gross method with the terms 2/10, net 30.

(50) Mar 28 The purchase of inventory on account on February 20th was paid in full.

(51) Mar 29 The petty cash fund had $400 in cash and receipts in total amounts for the following expense categories: entertainment-$250, travel- $265, miscellaneous-$100, postage $240, and supplies $190. The petty cash fund was replenished.

(52) Mar 30 Cash sales for two weeks equaled $24,000. The cost of inventory sold equaled $11,500.

(53) Mar 30 The unearned revenue represented the rental of special equipment that was used by another company on weekends. $16,000 of the revenue was earned in March.

(54) Mar 31 Sales on account for the month of March totaled $78,000 with the terms 2/10, net 30. The cost of inventory sold equaled $37,000.

(55) Mar 31 The Company paid legal fees of $1,500.

(56) Mar 31 Collected $75,000 from the accounts receivable less a total sales discount of $1,500 for the payment of receivables within the ten day discount period.

(57) Mar 31 Consulting revenue on credit for the month totaled $27,000.

(58) Mar 31 Rachel's returned $4,000 of inventory that we purchased earlier in the month.

(59) Mar 31 A warehouse building was acquired for $325,000. Closing costs on the acquisition equaled $10,500, and there were costs of $15,800 to get the building into an operational condition to be used by the company. The company paid $75,000 in cash as a down payment with the balance due being added to the mortgage payable account.

(60) Mar 31 The utility bill of $7,500 for the quarter was paid.

(61) Mar 31 The Company repaid the 90 day note payable from January 2nd in full plus interest.

(62) Mar 31 A customer sent an advance payment of $15,000 for the use of special equipment in April and May.

(63) Mar 31 A customer returned $5,000 of merchandise in good condition. The cost of the merchandise as $2,200.

(64) Mar 31 The Company reimbursed management for mileage for the quarter a total of $2,500. Please use mileage expense account.

(65) Mar 31 Equipment with a historical cost of $20,000 and an accumulated depreciation of $6,000 was sold for $16,000 cash. (Hint-first update the depreciation for the 3 months-January through March which was $500)

(66) Mar 31 Equipment with a historical cost of $20,000 and an accumulated depreciation of $18,000 was disposed of with an additional disposal cost of $1,300. (Hint-first update the depreciation for the 3 months-January through March which was $500.)

(67) Mar 31 The monthly payment for March of the mortgage payable was made.

Record these adjusting entries for the quarter so Financial Statements are correct!

A1-Mar 31 The equipment depreciation entry for the three months of 202x was completed.

A2 Mar 31 The depreciation entry for the building for the months of January, February, and March was entered.

A3 Mar 31 The amortization of intangible assets for the three months of 202x was completed.

A4 Mar 31 The bad debt expense based on 1.0% of credit sales for the quarter was recorded.

A5 Mar 31 Salary expenses incurred during the month of March but not yet paid equaled $15,500

A6 Mar 31 Tax expenses incurred during the month of March but not yet paid equaled $8,900.

A7 Mar 31 A physical inventory of supplies indicated a total amount of $5,000 of supplies still on hand. A journal entry was completed for the supplies used during the quarter.

A8 Mar 31 The amount of rent expense for the warehouse for the first three months of 2021 was recognized.

A9 Mar 31 The Company provided services to a customer in the amount of $14,000 during March but a bill has not been sent.

A10 Mar 31 The amount of insurance expense for the first three months of 2021 was recognized.

A11 Mar 31 The amount of interest earned on marketable securities for the three months of 2021 was recognized.

A12 Mar 31 The amount of interest expense for the total long-term notes payable for the first three months of 2021 was recognized.

A13 Mar 31 The amount of interest expense for the bonds payable for the three months of 2021 was recognized.

	Journal Entries
	Particulars	Debit	Credit
1
	Cash	40,000
	Capital Stock		40,000
2
	Cash	60000
	Short-Term Notes Payable		60000
3
	Prepaid Rent	30,000
	Cash		30,000
4
	Retained Earnings	7,500
	Dividend Payable		7,500
5	Wages payable and taxes payable was paid in full
	Wages payable	10800
	Taxes Payable	7200
	Cash		18,000
6
	Account Payable	30,000
	Purchase discount		600
	Cash		29,400
7
	Cash	38,000
	Cost of good Sold	16,000
	Inventory		16,000
	Sales		38,000
8
	Cash	10,000
	Consulting Service Revenue		10,000
9
	Supplies	4,500
	Cash		4,500
10	6% Notes Receivable	25,000
	Account Receivable		25,000
11
	Account Payable	10,000
	Cash		10,000
12	Purchased $60,000 of inventory on account with the terms 2/10, net 30.
	Inventory	60,000
	Account Payable		60,000
13
	Freight In	1,800
	Cash		1,800
14
	Cash	28,000
	Sales		28,000
15
	Accounts Receivable	62,000
	Sales		62,000
16
	Unearned Revenue	4,000
	Rent Revenue		4,000
17	To record the payment on accounts receivable
	Cash	49,000
	Sales discount	1000
	Accounts Receivable		50,000
18
	Salary Expense	12,000
	Taxes expense	5,000
	Cash		17,000
19
	Repair Expenses	6,000
	Cash		6,000
20	To record the advertising expense for the month of January
	Advertising Expense	2,500
	Accrued Advertising Expense		2,500
21	To record the payment of interest and principal of mortgage payable
	Mortgage Payable	1,437
	Interest Expense	2,063
	Cash		3,500
22
	Accounts Receivable	10,000
	Consulting Service Revenue		15,000
23
	Freight out	1,200
	Cash		1,200
24	issuance of 5,000 shares
	Cash	150,000
	Paid In Capital		100,000
	Capital Stock		50,000
25
	Petty Cash Fund	800
	Cash		800
26
	Treasury Stock	20,000
	Cash		20,000
27
	Accounts Payable	60,000
	Purchase Discount		1,200
	Cash		58,800
28	To record the payment of dividends
	Dividends Payable	10,500
	Cash		10,500
29	To record the cash sales
	Cash	21,000
	Sales		21,000
	To record the cost of inventory sold
	Cost of Goods Sold	9,500
	Inventory		9,500
30	receipt of cash from consulting revenue
	Cash	20,000
	Consulting Service Revenue		20,000
31	purchases on account 2/10, net 30
	Purchases	31,000
	Accounts Payable		31,000
32
	Freight In	900
	Cash		900
33
	Advertising Expense	4,000
	Accrued Advertising Expense		2,500
	Cash		6,500
34
	Cash	32,000
	Sales		32,000
	Cost of Goods Sold	15,000
	Inventory		15,000
35
	Accounts Receivable	22,000
	Consulting Revenue		22,000
36
	Mortgage Payable	1,437
	Interest Expense	2,063
	Cash		3,500
37
	Cash	68,600
	Sales discount	1,400
	Accounts Receivable		70,000
38
	Salary Expense	18,000
	Taxes Expense	6,000
	Cash		24,000
39
	Taxes Expense	4,100
	Cash		4,100
40	To record the sales on account, 2/10 net 30; To record the cost of inventory sold
	Accounts Receivable	75,000
	Sales		75,000
	Cost of Goods Sold	33,800
	Inventory		33,800
41	Sales Allowances	1,700
	Cash		1,700
42
	Short Term Note Payable	30,000
	Interest Expense	2,400
	Cash		32,400.00
43
	Petty Cash Fund	700
	Cash		700
44
	Supplies	3,900
	Accounts Payable		3,900
45
45	Cash	23,000
	Sales		23,000
	Cost of Goods Sold	11,600
	Inventory		11,600
46
	Cash	17,000
	Consulting Service Revenue		17,000
47
	Cash	9,000
	Treasury Stock		6,000
	Paid in Capital - Treasury Stock		3,000
48
	Cash	25,250
	Interest Income		250
	Notes Receivable		25,000
49	purchased $51,000 of inventory on account using the gross method with the terms 2/10, net 30.
	Purchases	51,000
	Accounts Payable		51,000
50
	Accounts Payable	31,000
	Cash		31,000
51	To replenish the petty cash fund and record the cash shortage
	Entertainment Expense	250
	Travel Expense	265
	Miscellaneous Expense	100
	Postage Expense	240
	Supplies Expense	190
	Cash Short or Over	55
	Cash		1,100
52
	Cash	24,000
	Sales		24,000
	Cost of Goods Sold	11,500
	Inventory		11,500
53	Unearned Revenue	16,000
	Rent Revenue		16,000
54	To record the sales on account, 2/10 net 30
	Accounts Receivable	78,000
	Sales		78,000
55	Legal Fees	1,500
	Cash		1,500
56	Cash	73,500
	Sales discount	1,500
	Accounts Receivable		75,000
57	Accounts Receivable	27,000
	Consulting Service Revenue		27,000
58	Accounts Payable	4,000
	Purchase Return		4,000
59	Building	351,300
	Cash		75,000
	Mortgage Payable		276,300
60	Utilities Expense	7,500
	Cash		7,500
61	To record the repayment of 4% 90 day note payable
	Note Payable	60000
	Interest Expense	600
	Cash		60,600
62	Cash	15,000
	Unearned Revenue		15,000
63	Sales	5,000
	Cash		5,000
	Inventory	2,200
	Cost of Goods Sold		2,200
64	Mileage Expense	2,500
	Cash		2,500
65	Cash	16,000
	Accumulated Depreciation	6,500
	Equipment		20,000
	Gain on sale of Equipment		2,500
66	Accumulated Depreciation	18,500
	Loss on disposal	3,000
	Equipment		20,000
	Cash		1,500
67	Mortgage Payable	1,437
	Interest Expense	2,063
	Cash		3,500
	Total
	ADJUSTING ENTRIES
A1	Depreciation Expense	10,500
	Accumulated Depreciation Eq		10,500
A2	Depreciation Expense	3,438
	Accumulated Depreciation Build		3,438
A3	Amortization Expense	500
	Intangible Asset		500
A4	Bad Debts Expense	2,150
	Uncollectible Accounts		2,150
A5	Salary Expense	15,500
	Accrued Salaries Expense		15,500
A6	Taxes Expense	8,900
	Accrued Taxes Expense		8,900
A7	Supplies Expense	7,400
	Supplies		7,400
A8	Rent Expense	7,500
	Prepaid Rent		7,500
A9	Accounts Receivable	14,000
	Consulting Service Revenue		14,000
A10	Insurance Expense	2,250.00
	Prepaid Insurance		2,250.00
A11	Accrued Interest Income	175
	Interest Income		175
A12	Interest Expense	625
	Accrued Interest Expense		625
A13	Interest Expense	1,250
	Accrued Interest Expense		1,250

Rachel's Enterprising Solutions
Trial Balance with Adjusting Entries
As of March 2021
	UNADJUSTING	ADJUSTING	ADJUSTED
Account Name	Balance	Entry	Balance
Cash	277,250		277,250
Accounts Receivable	54,000		54,000
Notes Receivable	0		0
Uncollectable Accounts	-2,150		-2,150
Petty Cash Fund	1,500		1,500
Building	351,300		351,300
Equipment	-40,000		-40,000
Inventory	-178,400		-178,400
Purchases	142,000		142,000
Intangible Asset	-500		-500
Supplies	8,400	-7,400	1,000
Accounts Payable	-10,900		-10,900
Taxes Payable	12,200		12,200
Wages Payable	10,800		10,800
Mortgage Payable	-271,989		-271,989
Short Term Notes Payable	30,000		30,000
Dividends Payable	0		0
Capital Stock	-90,000		-90,000
Paid in Capital	97,000		97,000
Retained Earnings	10,500		10,500
Sales	-376,000		-376,000
Treasury Stock	14,000		14,000
Purchase Discount	1,800		1,800
Consulting Service Revenue	-96,000		-96,000
Unearned Revenue	5,000		5,000
Rent Revenue	-20,000		-20,000
Unearned Consulting Revenue	5,000		5,000
Interest Income	-250		-250
Gain on Sale of Equipment	-2,500		-2,500
Cost of Good Sold	178,400		178,400
Freight In	2,700		2,700
Sales Discount	1,900		1,900
Salary Expense	30,000		30,000
Repair Expense	6,000		6,000
Advertising Expense	6,500		6,500
Accrued Advertising Expense	-5,000		-5,000
Interest Expense	9,189	1,875	11,064
Taxes Expense	10,100	8,900	19,000
Sales Allowance	1,700		1,700
Entertainment Expense	250		250
Travel Expense	265		265
Miscellaneous Expense	100		100
Postage Expense	190		190
Cash Short or Over	55		55
Legal Fees	1,500		1,500
Purchase Return	-4,000		-4,000
Utilities Expense	7,500		7,500
Mileage Expense	2,500		2,500
Accumulated Depreciation	25,000	-13,938	11,062
Loss on Disposal	3,000		3,000
Depreciation Expense		13,938	13,938
Amortization Expense		500	500
Bad Debts Expense		2,150	2,150
Accrued Salaries Expense		-15,500	-15,500
Accrued Taxes Expense		-8,900	-8,900
Supplies Expense		7,400	7,400
Rent Expense		7,500	7,500
Prepaid Rent		-7,500	-7,500
Consulting Service Revenue		-14,000	-14,000
Insurance Expense		2,250	2,250
Prepaid Insurance		-2,250	-2,250
Accrued Interest Income		175	175
Accrued Interest Expense		-1,875	-1,875
Total	209,910	-26675	183,235

Rachel's Enterprises Solutions
Income Statement
As of March 31, 2021
Revenue and Gains
Sales	376,000
Sales Discount	-1,900
Sales Allowance	-1,700
Consultating Services Revenue	96,000
Consulting Service Revenue	14,000
Rent Revenue	20,000
Interest Income	250
Gain on Sale of Equipment	2,500
Loss on Disposal	-3,000
Total Revenue	502,150
Expenses
Cost of Goods Sold	178,400
Purchases	142,000
Purchase Discount	1,800
Purchase Return	-4,000
Freight In	2,700
Salary Expense	30,000
Repair Expense	6,000
Advertising Expense	6,500
Interest Expense	11,064
Taxes Expense	19,000
Entertainment Expense	250
Travel Expense	265
Miscellaneous Expense	100
Postage Expense	190
Legal Fees	1,500
Utility Expense	7,500
Mileage Expense	2,500
Depreciation Expense	13,938
Amortization Expense	500
Bad Debts Expense	2,150
Supplies Expense	7,400
Rent Expense	7,500
Inusurancearningse Expense	2,250
Total Expenses	439,507
Net Income Before Income Tax	62,643
Income Tax (21%)	13,155
Net Income	49,488

Develop a single statement of retained earnings and balance sheet.