Santana Rey created Business Solutions on October 1, 2011. 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, 2011. 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.
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, 2012. Its transactions for January through March follow:
1. Prepare journal entries to record each of the January through March transactions.
2. Post the journal entries in part 1 to the accounts in the company’s general ledger. (Note: Begin with the ledger’s post -closing adjusted balances as of December 31, 2011.)
3. Prepare a partial work sheet consisting of the first six columns (similar to the one shown in Exhibit 5B.1) that includes the unadjusted trial balance, the March 31 adjustments (a) through (g), and the adjusted trial balance. Do not prepare closing entries and do not journalize the adjustments or post them to the ledger.
4. Prepare an income statement (from the adjusted trial balance in part 3) for the three months ended March31, 2012. Use a single-step format. List all expenses without differentiating between selling expenses andgeneral and administrative expenses.
5. Prepare a statement of owner’s equity (from the adjusted trial balance in part 3) for the three months ended March 31, 2012.
6. Prepare a classified balance sheet (from the adjusted trial balance) as of March 31, 2012