Chapter 4: Serial Problem

Problem SP 4: Business Solutions - Santana Rey's Transactions (January– March) 1. Prepare Journal Entries for Transactions (January - March) 1. January 4: Paid cash to Lyn Addie for five days’ work. o Entry:  Debit Wages Payable $500 (4 days × $125, accrued in previous year)  Debit Wages Expense $125 (1 day × $125, current expense)  Credit Cash $625 2. January 5: Santana Rey invested $25,000 cash in the business. o Entry:  Debit Cash $25,000  Credit Common Stock $25,000 3. January 7: Purchased merchandise from Kansas Corp. for $5,800, terms 1/10, n/30, FOB shipping point. o Entry:  Debit Merchandise Inventory $5,800  Credit Accounts Payable $5,800 4. January 9: Received $2,668 cash from Gomez Co. as full payment. o Entry:  Debit Cash $2,668  Credit Accounts Receivable $2,668 5. January 11: Completed project for Alex’s Engineering, billed $5,500 (Unearned revenue $1,500). o Entry:  Debit Unearned Revenue $1,500  Debit Accounts Receivable $5,500  Credit Service Revenue $7,000 6. January 13: Sold merchandise to Liu Corp. (Cost $3,560, Sales $5,200). o Entry for Sale:  Debit Accounts Receivable $5,200  Credit Sales $5,200 o Entry for Cost:  Debit Cost of Goods Sold $3,560  Credit Merchandise Inventory $3,560 7. January 15: Paid $600 cash for freight charges on January 7 purchase. o Entry:  Debit Merchandise Inventory $600  Credit Cash $600 8. January 16: Received $4,000 cash from Delta Co. for computer services. o Entry:  Debit Cash $4,000  Credit Service Revenue $4,000 9. January 17: Paid Kansas Corp. for January 7 purchase, net of discount. o Calculation: $5,800 × 1% = $58 (discount); $5,800 - $58 = $5,742 (payment) o Entry:  Debit Accounts Payable $5,800  Credit Cash $5,742  Credit Merchandise Inventory $58 10. January 20: Gave a $500 price reduction (allowance) to Liu Corp. o Entry:  Debit Sales Returns and Allowances $500  Credit Accounts Receivable $500 11. January 22: Received balance from Liu Corp., net of discount and allowance. o Calculation: $5,200 - $500 = $4,700 (adjusted balance); $4,700 × 1% = $47 (discount); $4,700 - $47 = $4,653 (payment) o Entry:  Debit Cash $4,653  Debit Sales Discounts $47  Credit Accounts Receivable $4,700 12. January 24: Returned defective merchandise to Kansas Corp. for credit ($496 net). o Entry:  Debit Accounts Payable $496  Credit Merchandise Inventory $496 13. January 26: Purchased merchandise from Kansas Corp. for $9,000, terms 1/10, n/30, FOB destination. o Entry:  Debit Merchandise Inventory $9,000  Credit Accounts Payable $9,000 14. January 26: Sold merchandise to KC, Inc. (Cost $4,640, Sales $5,800). o Entry for Sale:  Debit Accounts Receivable $5,800  Credit Sales $5,800 o Entry for Cost:  Debit Cost of Goods Sold $4,640  Credit Merchandise Inventory $4,640 15. January 31: Paid Lyn Addie $1,250 for 10 days of work. o Entry:  Debit Wages Expense $1,250  Credit Cash $1,250 16. February 1: Paid $2,475 for rent in advance (3 months). o Entry:  Debit Prepaid Rent $2,475  Credit Cash $2,475 17. February 3: Paid Kansas Corp. for January 26 purchase, net of discount, less $496 credit. o Calculation: $9,000 - $496 = $8,504; discount = $8,504 × 1% = $85.04; payment = $8,504 - $85.04 = $8,418.96 o Entry:  Debit Accounts Payable $8,504  Credit Cash $8,419  Credit Merchandise Inventory $85 18. February 5: Paid $600 cash to Facebook for an advertisement. o Entry:  Debit Advertising Expense $600  Credit Cash $600 19. February 11: Received balance from Alex’s Engineering for fees billed on January 11. o Entry:  Debit Cash $5,500  Credit Accounts Receivable $5,500 20. February 15: Paid $4,800 cash dividend. o Entry:  Debit Dividends $4,800  Credit Cash $4,800 21. February 23: Sold merchandise to Delta Co. (Cost $2,660, Sales $3,220). o Entry for Sale:  Debit Accounts Receivable $3,220  Credit Sales $3,220 o Entry for Cost:  Debit Cost of Goods Sold $2,660  Credit Merchandise Inventory $2,660 22. February 26: Paid Lyn Addie $1,000 for 8 days of work. o Entry:  Debit Wages Expense $1,000  Credit Cash $1,000 23. March 8: Purchased computer supplies from Harris Office Products for $2,730, terms n/30, FOB destination. o Entry:  Debit Computer Supplies $2,730  Credit Accounts Payable $2,730 24. March 9: Received balance due from Delta Co. for merchandise sold on February 23. o Entry:  Debit Cash $3,220  Credit Accounts Receivable $3,220 25. March 11: Paid $960 cash for minor computer repairs. o Entry:  Debit Repairs Expense $960 Credit Cash $960 26. March 16: Received $5,260 cash from Dream, Inc. for services provided. o Entry:  Debit Cash $5,260  Credit Service Revenue $5,260 27. March 19: Paid full amount of $3,830 to Harris Office Products. o Entry:  Debit Accounts Payable $3,830  Credit Cash $3,830 28. March 24: Billed Easy Leasing $9,047 for computing services provided. o Entry:  Debit Accounts Receivable $9,047  Credit Service Revenue $9,047 29. March 25: Sold merchandise to Wildcat Services (Cost $2,002, Sales $2,800). o Entry for Sale:  Debit Accounts Receivable $2,800  Credit Sales $2,800 o Entry for Cost:  Debit Cost of Goods Sold $2,002  Credit Merchandise Inventory $2,002 30. March 30: Sold merchandise to IFM Company (Cost $1,048, Sales $2,220). o Entry for Sale:  Debit Accounts Receivable $2,220  Credit Sales $2,220 o Entry for Cost:  Debit Cost of Goods Sold $1,048  Credit Merchandise Inventory $1,048 31. March 31: Reimbursed Santana Rey $128 for business mileage. o Entry:  Debit Mileage Expense $128  Credit Cash $128 