Question

Required Information Serial Problem Business Solutions LO P1, P2, P3, P4 [The following Information applies to the questions displayed below.) Santana Rey created Business Solutions on October 1, 2019. 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, 2019. Santana Rey decided to add a fourth digit with a decimal umber 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, 372 580 1,665 825 8,000 $ 400 20,000 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 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 S. Rey, Capital 302 S. Rey, Withdrawals 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 1,250 1, 100 500 1,500 80, 360 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. Its transactions for January through March follow:

Answer 1

	Journal Entries
Date	Account Title	Debit	Credit
4-Jan	Wages payable	500
	Wages expense	125
	Cash		625
5	Cash	25000
	S.Rey Capital		25000
7	Merchandise Inventory	5800
	Accounts payable		5800
	FOB shipping pt.--Terms 1/10,n/30
9	Cash	2668
	Gomez Co.		2668
11	Alex's Engineering Co.	5500
	Unearned services revenue	1500
	Computer Services revenue		7000
13	Liu Corp	5200
	Sales		5200
	Cost of good sold	3560
	Merchandise Inventory		3560
15	Merchandise Inventory	600
	Cash		600
16	Cash	4000
	Computer Services revenue		4000
17	Accounts payable	5800
	Merchandise Inventory(5800*1%)		58
	Cash(Bal.)		5742
20	Sales returns & allowances	500
	Liu Corp		500
22	Cash(4700-47)	4653
	Sales discounts(4700*1%)	47
	Liu Corp(5200-500)		4700
24	Accounts payable(496/99*100)	501
	Merchandise Inventory(501*1%)		5
	Merchandise Inventory(Bal.)		496
26	Merchandise Inventory	9000
	Accounts payable		9000
	KC Inc.	5800
	Sales		5800
28	Cost of good sold	4640
	Merchandise Inventory		4640
31	Wages expense	1250
	Cash		1250
1-Feb	Prepaid rent	2475
	Cash		2475
3	Accounts payable(9000-501)	8499
	Merchandise Inventory(9000*1%)		90
	Cash(Bal.)		8409
5	Advertising expense	600
	Cash		600
11	Cash	5500
	Alex's Engineering Co.		5500
15	S.Rey Withdrawals	4800
	Cash		4800
23	Delta Co.	3220
	Sales		3220
	Cost of good sold	2660
	Merchandise Inventory		2660
26	Wages expense	1000
	Cash		1000
27	Mileage expense	192
	Cash		192
8-Mar	Computer supplies	2730
	Accounts payable		2730
9	Cash(3220-32)	3188
	Sales discounts(3220*1%)	32
	Delta Co.		3220
11	Repair expenses-Computer	960
	Cash		960
16	Cash	5260
	Computer Services revenue		5260
19	Accounts payable(1100+2730)	3830
	Cash		3830
24	Easy Leasing	9047
	Computer Services revenue		9047
25	Wildcat Services	2800
	Sales		2800
	Cost of good sold	2002
	Merchandise Inventory		2002
30	IFM Company	2220
	Sales		2220
	Cost of good sold	1048
	Merchandise Inventory		1048
31	Mileage expense	128
	Cash		128
		148835	148835

	Adjusting entries
a.	Computer supplies expense	1305
	Computer supplies		1305
	(3310-2005)
b.	Insurance expense	555
	Prepaid Insurance		555
c.	Wages expense	875
	Wages payable		875
d.	Rent expense	2475
	Prepaid rent		2475
e.	Depn. Exp.-Comp.Eqpt.	1250
	Acc. Depn.-Comp. Equpt.		1250
f.	Depn. Exp.-Office eqpt.	400
	Acc. Depn.-Office Eqpt.		400
g.	COGS	137
	Merchandise Inventory		137
	(841-704)