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, $3,750; Accounts Receivable, $3,900; Equipment, $0; Notes Payable, $1,875; Accounts Payable, $750; Common Stock, $4, 125; Retained Earnings, $900; 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 $450 cash toward accounts payable (2) Paid $2,700 cash for January rent (3) Billed clients $8,625 for January classes (4) Received $375 invoice from supplier for T-shirts given to January class members as an advertising promotion (5) Collected $7,500 cash from clients previously billed for services rendered (6) Paid $1,800 cash for employee wages (7) Received $510 invoice for January utilities expense (8) Paid $15 cash to bank as January interest on notes payable (9) Declared and paid $675 cash dividend to stockholders (10) Paid $3,000 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. Financial statement effects template Income statement Statement of stockholders' equity Balance sheet Note: Use negative signs with your answers, when appropriate. Balance Sheet Income Statement Noncash Contributed Earned Transaction Cash Asset + Assets = Liabilities + Capital Capital Revenue - Expenses = Net Income Beg. Balance $ 3,750 + $ 3,900 = $ 0 + $ 0 + 0 $ - $ (1) Paid $450 cash toward accounts payable (450) + O = 10 0 O (2) Paid rent in cash: $2,700 (2,700) + O 0 (3 ) Billed clients $8,625 0 + 8,625 = 0 - 0 + 0 0 ( 4 ) $375 invoice received for advertising 0 + E 0 (5) Cash collected on account: $7,500 7,500 + (7,500) = 0 + + o oooo (6) Paid wages expense in cash: $1,800 (1,800) + 0 - 0 11 11 11 11 11 11 11 11 11 11 11 o o o o o O O O (7 ) Invoiced for utility expense:$510 0 0 - 0 O ( 8 ) Paid $15 cash for interest on note (15 ) - 0 0 - 0 oooooo (9) Paid $675 cash dividend (675) 0 - ooOO (10) Paid $3,000 cash for sound equipment (3,000) + E 0 - + TOTALS 2, 610 + o