Torrey Peoples began the Peoples Word Processing Service in December. The firm provides word-processing services for businesses and is currently operating with leased equipment. On January 1, the assets and liabilities of the business were: Cash, \(\$ 6,400\); Accounts Receivable, \$7,500; Accounts Payable, \$900; and Notes Payable, \(\$ 3,500\). Assume that Retained Earnings as of January 1, were zero. Common Stock balance was \(\$ 9,500\). The following transactions occurred during the month of January:

1 Paid rent on office and equipment for January, \(\$ 1,100\).

2 Collected \(\$ 8,200\) on account from clients.

3 Borrowed \(\$ 5,000\) from a bank and signed a note payable for that amount.

4 Billed clients for work performed on account, \(\$ 9,150\).

5 Paid \(\$ 600\) on accounts payable.

6 Received invoice for January advertising, \(\$ 750\).

7 Paid January salaries, \(\$ 3,750\).

8 Paid January utilities, \(\$ 230\).

9 Paid stockholders a dividend in the amount of \(\$ 3,100\).

10 Purchased a printer (on January 31 ) for business use, \(\$ 1,750\).

11 Paid \(\$ 150\) to bank as January interest on the outstanding notes payable.

Required

a. Set up an accounting equation in columnar form with the following individual assets, liabilities, and stockholders' equity accounts: Cash, Accounts Receivable, Equipment, Accounts Payable, Notes Payable, Common Stock, Retained Earnings. Enter the January 1 balances below each item. The beginning Equipment amount is \(\$ 0\).

b. Show the impact (increase or decrease) of the January transactions on the beginning balances, and total all columns to show that assets equal liabilities plus stockholders' equity as of January 31.