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In response to requests from customers, Lopez 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, Success Systems does not use reversing entries and, therefore, all revenue and expense accounts have zero beginning balances as of January 1, 2010. Its transactions for January through March follow:
Jan.
4
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.
5
Adriana Lopez invested an additional $25,000 cash in the business in exchange for more common stock.
7
Purchased $5,800 of merchandise from Kansas Corp. with terms of 1/10, n/30, FOB shipping point, invoice dated January 7.
9
Received $2,668 cash from Gomez Co. as full payment on its account.
11
Completed a five-day project for Alex’s Engineering Co. and billed it $5,500, which is the total price of $7,000 less the advance payment of $1,500.
13
Sold merchandise with a retail value of $5,200 and a cost of $3,560 to Liu Corp., invoice dated January 13.
15
Paid $600 cash for freight charges on the merchandise purchased on January 7.
16
Received $4,000 cash from Delta Co. for computer services provided.
17
Paid Kansas Corp. for the invoice dated January 7, net of the discount.
20
Liu Corp. returned $500 of defective merchandise from its invoice dated January 13. The returned merchandise, which had a $320 cost, is discarded. (The policy of Success Systems is to leave the cost of defective products in cost of goods sold.)
22
Received the balance due from Liu Corp., net of both the discount and the credit for the returned merchandise.
24
Returned defective merchandise to Kansas Corp. and accepted a credit against future purchases. The defective merchandise invoice cost, net of the discount, was $496.
26
Purchased $9,000 of merchandise from Kansas Corp. with terms of 1/10, n/30, FOB destination, invoice dated January 26.
26
Sold merchandise with a $4,640 cost for $5,800 on credit to KC, Inc., invoice dated January 26.
29
Received a $496 credit memorandum from Kansas Corp. concerning the merchandise returned on January 24.
31
Paid cash to Lyn Addie for 10 days’ work at $125 per day.
Feb.
1
Paid $2,475 cash to Hillside Mall for another three months’ rent in advance.
3
Paid Kansas Corp. for the balance due, net of the cash discount, less the $496 amount in the credit memorandum.
5
Paid $600 cash to the local newspaper for an advertising insert in today’s paper.
11
Received the balance due from Alex’s Engineering Co. for fees billed on January 11.
15
Paid $4,800 cash for dividends.
23
Sold merchandise with a $2,660 cost for $3,220 on credit to Delta Co., invoice dated February 23.
26
Paid cash to Lyn Addie for eight days’ work at $125 per day.
27
Reimbursed Adriana Lopez for business automobile mileage (600 miles at $0.32 per mile).
Mar.
8
Purchased $2,730 of computer supplies from Harris Office Products on credit, invoice dated March 8.
9
Received the balance due from Delta Co. for merchandise sold on February 23.
11
Paid $960 cash for minor repairs to the company’s computer.
16
Received $5,260 cash from Dream, Inc., for computing services provided.
19
Paid the full amount due to Harris Office Products, including amounts created on December 15 (of $1,100) and March 8.
24
Billed Easy Leasing for $8,900 of computing services provided.
25
Sold merchandise with a $2,002 cost for $2,800 on credit to Wildcat Services, invoice dated March 25.
30
Sold merchandise with a $1,100 cost for $2,220 on credit to IFM Company, invoice dated March 30.
31
Reimbursed Adriana Lopez for business automobile mileage (400 miles at $0.32 per mile).
The following additional facts are available for preparing adjustments on March 31 prior to financial statement preparation:
The March 31 amount of computer supplies still available totals $2,005.
Three more months have expired since the company purchased its annual insurance policy at a $2,220 cost for 12 months of coverage.
Lyn Addie has not been paid for seven days of work at the rate of $125 per day.
Three months have passed since any prepaid rent has been transferred to expense. The monthly rent expense is $825.
Depreciation on the computer equipment for January 1 through March 31 is $1,250.
Depreciation on the office equipment for January 1 through March 31 is $400.
The March 31 amount of merchandise inventory still available totals $704.

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