SP 4 Serial Problem Business Solutions (Static) 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 Account Title Debit Credit 101 Cash $ 48,372 106.1 Alex's Engineering Company 0 106.2 Wildcat Services 0 106.3 Easy Leasing 0 106.4 IFM Company 3,000 106.5 Liu Corporation 0 106.6 Gomez Company 2,668 106.7 Delta Company 0 106.8 KC, Incorporated 0 106.9 Dream, Incorporated 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 depreciation-office equipment $ 400 167 Computer equipment 20,000 168 Accumulated depreciation-Computer equipment 1,250 201 Accounts payable 1,100 210 Wages payable 500 236 Unearned computer services revenue 1,500 307 Common stock 73,000 318 Retained earnings 7,360 319 Dividends 403 Computer services revenue 413 Sales 414 Sales returns and allowances 415 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 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 (Numbers. 119, 413, 414, 415, and 502) are added to its general ledger to accommodate the company's new merchandising activities. Its transactions for January through March follow. 0 OO OOOOOOOOOOOOO January 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. January 5 Santana Rey invested an additional $25,000 cash in the company in exchange for more common stock. January 7 The company purchased $5,800 of merchandise from Kansas Corporation with terms of 1/10, n/30, FOB shipping point, invoice dated January 7. January 9 The company received $2,668 cash from Gomez Company as full payment on its account. January 11 The company completed a five-day project for Alex's Engineering Company and billed it $5,500, which is the total price of $7,000 le33 the advance payment of $1,500. The company debited Unearned Computer Services Revenue for $1,500. January 13 The company sold merchandise with a retail value of $5,200 and a cost of $3,560 to Liu Corporation, invoice dated January 13. January 15 The company paid $600 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 $500 to Liu Corporation and credited Liu's accounts receivable for that amount. January 22 The company received the balance due from Liu Corporation, net of the discount and the allowance. January 24 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 $496. January 26 The company purchased $9,000 of merchandise from Kansas Corporation with terms of 1/10, n/30, FOB destination, invoice dated January 26. January 26 The company sold merchandise with a $4,640 cost for $5,800 on credit to KC, Incorporated, invoice dated January 26. January 31 The company paid cash to Lyn Addie for 10 days' work at $125 per day. February 1 The company paid $2,475 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 $496 credit from merchandise returned on January 24. February 5 The company paid $600 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 The company paid a $4,800 cash dividend. February 23 The company sold merchandise with a $2,660 cost for $3,220 on credit to Delta Company, invoice dated February 23. February 26 The company paid cash to Lyn Addie for eight days' work at $125 per day. February 27 The company reimbursed Santana Rey $192 cash for business automobile mileage. The company recorded the reimbursement as "Mileage Expense.' March 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. March 9 The company received the balance due from Delta Company for merchandise sold on February 23. March 11 The company paid $960 cash for minor repairs to the company's computer. March 16 The company received $5,260 cash from Dream, Incorporated, for computing services provided. March 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. March 24 The company billed Easy Leasing for $9,047 of computing services provided. March 25 The company sold merchandise with a $2,002 cost for $2,800 on credit to Wildcat Services, invoice dated March 25. March 30 The company sold merchandise with a $1,048 cost for $2,220 on credit to IFM Company, invoice dated March 30. March 31 The company reimbursed Santana Rey $128 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 $2,005. b. Prepaid Insurance coverage of $555 expired during this three-month period. c. Lyn Addie has not been paid for seven days of work at the rate of $125 per day. d. Prepaid rent of $2,475 expired during this three-month period. e. Depreciation on the computer equipment for January 1 through March 31 is $1,250. 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 $704. 101: Cash Debit Credit 106.1: Accounts Receivable-Alex's Engineering Company Date Debit Credit Balance Balance December 31 0 625 5,500 . January 11 February 11 5,500 0 5,500 25,000 2,888 600 4,000 > 5,742 4,653 > Date December 31 January 04 January 05 January 09 January 15 January 16 January 17 January 22 January 31 February 01 February 03 February 05 February 11 February 15 February 26 February 27 March 09 March 11 March 16 March 19 1,250 2,475 8,414 800 (625) 24,375 27,043 26,443 30,443 24,701 29,354 28,104 25,629 17,215 16,615 22,115 17,315 16,315 16,123 5,500 > 4,800 1,000 192 980 19,343 18,383 23,843 19,813 5,260 > 3,830 March 31 128 19,685 106.3: Accounts Receivable-Easy Leasing Date Debit Credit Balance 106.2: Accounts Receivable-Wildcat Services Date Debit Credit Balance December 0 31 March 25 2,800 2,800 December 31 0 March 24 9,047 9,047 106.5: Accounts Receivable-Liu Corporation Date Debit Credit Balance 106.4: Accounts Receivable-IFM Company Date Debit Credit Balance December 31 March 30 2,220 2,220 December 31 0 5,200 January 13 January 20 January 22 500 5,200 4,700 0 4,700 106.7: Accounts Receivable-Delta Company Date Debit Credit Balance 106.6: Accounts Receivable-Gomez Company Date Debit Credit Balance December 31 January 09 2.688 (2,688) December 31 0 3,220 3,220 February 23 March 09 3,220 0 106.9: Accounts Receivable-Dream, Incorporated Date Debit Credit Balance 106.8: Accounts ReceivableKC, Incorporated Date Debit Credit Balance December 31 0 January 26 5,800 5,800 December 31 0 128: Prepaid Insurance Debit Credit 131: Prepaid Rent Debit Credit Balance Date Balance Date December 31 March 30 December 31 X 128 X (128) 163: Office Equipment Debit Credit 164: Accumulated DepreciationOffice Equipment Date Debit Credit Balance Balance Date December 31 December 31 167: Computer Equipment Debit Credit 168: Accumulated Depreciation Computer Equipment Date Debit Credit Balance Balance Date December 31 December 31 201: Accounts Payable Debit Credit 210: Wages Payable Credit Balance Balance Debit Date December 31 December 31 236: Unearned Computer Services Revenue Date Debit Credit Balance December 31 307: Common stock Debit Credit Date Balance December 31 319: Dividends 318: Retained earnings Debit Credit Balance Date Debit Credit Balance Date December 31 403: Computer Services Revenue Debit Credit 413: Sales Debit Credit Date Balance Date Balance 414: Sales Returns and Allowances Debit Credit 415: Sales Discounts Debit Credit Date Balance Date Balance 502: Cost of Goods Sold 612: Depreciation Expense-Office Equipment Date Debit Credit Balance Date Debit Credit Balance 613: Depreciation Expense-Computer Equipment Date Debit Credit Balance 623: Wages Expense Debit Credit Date Balance 637: Insurance Expense Debit Credit 640: Rent Expense Debit Credit Date Balance Date Balance 652: Computer Supplies Expense Debit Credit 655: Advertising Expense Debit Credit Date Balance Date Balance 676: Mileage Expense Debit Credit 677: Miscellaneous Expenses Debit Credit Date Balance Date Balance 684: Repairs Expense-Computer Debit Credit Date Balance