This problem is the first problem in a sequence that begins an accounting cycle. The cycle is continued in Chapter 2 and completed in Chapter 3.

Adam Mazella recently left his job to open his own gym equipment repair business. Adam took all of the money he had in his personal savings account and used it to open Fitness Equipment Doctor, Inc., on March 1, 2018. Presented next are the transactions for the first month of operations for Fitness Equipment Doctor, Inc.:

Requirements

1. Enter the transactions for Fitness Equipment Doctor, Inc., for the month of March into the expanded accounting equation. Calculate the ending balances at March 31.

2. Prepare the income statement for Fitness Equipment Doctor, Inc., for the first month of operations.

3. Prepare the statement of retained earnings for Fitness Equipment Doctor, Inc., for the first month of operations.

4. Prepare the balance sheet for Fitness Equipment Doctor, Inc., at March 31.

5. Did Adam make a wise decision leaving his job to start Fitness Equipment Doctor, Inc.?

March 1 Adam invested $22,000 cash and a used truck with a fair market value of $13,000 in the business in exchange for the company's common stock. 3 Paid $3,600 cash to purchase equipment. 7 Purchased $900 of supplies on account. 12 Performed services for cash customers and received $850. 15 Incurred and paid salaries of $620 to the office receptionist. 16 Sold the company truck for $13,000. 18 Signed a note payable for $35,800 to purchase a new truck. 21 Performed $3,200 of services on account for a local hotel chain. 27 Paid $150 of the amount owed from the purchase of supplies on March 7. 30 Received $1,900 on account from credit customers. 31 Received the utility bill for the month of March, $250. The bill is not due until April 15. 31 Paid $1,500 dividends to the shareholder, Adam Mazella.