Analyzing Transactions Using the Financial Statement Effects Template and Preparing Financial Statements Schrand Aerobics, Inc., rents studio space (including a sound system) and specializes in offering aerobics classes. On January 1, 2015, its beginning account balances are as follows: Cash, $7,500; Accounts Receivable, $7,800; Equipment, $0; Notes Payable, $3,750; Accounts Payable, $1,500; Common Stock, $8,250; Retained Earnings, $1,800; Services Revenue, $0; Rent Expense, $0; Advertising Expense, $0; Wages Expense, $0; Utilities Expense, $0; Interest Expense, $0. The following transactions occurred during January. (1) Paid $900 cash toward accounts payable (2) Paid $5,400 cash for January rent (3) Billed clients $17,250 for January classes (4) Received $750 invoice from supplier for T-shirts given to January class members as an advertising promotion (5) Collected $15,000 cash from clients previously billed for services rendered (6) Paid $3,600 cash for employee wages (7) Received $1,020 invoice for January utilities expense (8) Paid $30 cash to bank as January interest on notes payable (9) Declared and paid $1,350 cash dividend to stockholders (10) Paid $6,000 cash on January 31 to purchase sound equipment to replace the rental system Required (a) Using the financial statements effects template, enter January 1 beginning amounts in the appropriate columns of the first row. (Hint: Beginning balances for columns can include amounts from more than one account.) (b) Report the effects for each of the separate transactions 1 through 10 in the financial statement effects template set up in part (a). Total all columns and prove that (1) assets equal liabilities plus equity at January 31, and (2) revenues less expenses equal net income for January. Note: Use negative signs with your answers, when appropriate. Balance Sheet Income Statement Earned Capital Cash Asset + Noncash Assets = Contributed Capital + $ Liabilities + + Revenue = Net Income Expenses $ $ + $ = $ + $ $ = $ + + + + = + + = + + II + = + + = Transaction Beg. Balance (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) + II + + Paid $900 cash toward accounts payable Paid rent in cash: $5,400 Billed clients $17,250 $750 invoice received for advertising Cash collected on account: $15,000 Paid wages expense in cash: $3,600 Invoiced for utility expense:$1,020 Paid $30 cash for interest on note Paid $1,350 cash dividend Paid $6,000 cash for sound equipment + II + + + = + + = = + + + = + = + + = + = + II + + TOTALS + = + = Note: Do not use negative signs with any of your answers. Schrand Aerobics, Inc. Income Statement For Month Ended January 31, 2015 $ Expenses TA 0 0 0 Advertising Expense Wages Expense Interest Expense Utilities Expense Total Expenses 0 0 0 Net Income $ 0 (Enter dividends as a negative number.) Schrand Aerobics, Inc. Statement of Stockholders' Equity For Month Ended January 31, 2015 Common Stock Retained Earnings Total Stockholders' Equity $ 0 $ 0 $ 0 Balance at January 1, 2015 Stock Issuance 0 0 0 Dividends 0 0 0 Net Income 0 0 0 Balance at January 31, 2015 $ 0 $ 0 $ 0 Schrand Aerobics, Inc. Balance Sheet January 31, 2015 Liabilities Assets Cash $ A $ O 0 Accounts Payable o Notes payable Accounts Receivable 0 Equipment 0 Total liabilities 0 Stockholders' Equity Common Stock 0 0 Retained Earnings 0 Total Liabilities and Equity $ Total Assets $ 0