Analyzing Transactions Using the Financial Statement Effects Template Sefcik Company began operations on the first of October. Following are the transactions for its first month of business. 1. S. Sefcik launched Sefcik Company and invested $110,000 into the business in exchange for common stock. The company also borrowed $220,000 from a local bank. 2. Sefcik Company purchased equipment for $209,000 cash and inventory of $88,000 on credit (the company still owes its suppliers for the inventory at month-end). 3. Sefcik Company sold inventory costing $66,000 for $110,000 cash. 4. Sefcik Company paid $26,400 cash for wages owed employees for October work. 5. Sefcik Company paid interest on the bank loan of $2,200 cash. 6. Sefcik Company recorded $1,100 of depreciation expense related to its equipment. 7. Sefcik Company paid a dividend of $4,400 cash. a. Record the effects of each transaction using the financial statement effects template. Balance Sheet Liabilities Transaction Cash Asset Noncash Assets 1. 330,000 Cash 0 Note Payable 2. (209,000) 209,000 = Cash Inventory 88,000 Inventory 3. 110,000 (66,000) Cash Inventory 4. (26,400) Cash 5. (2,200) Cash 6. 0 (1,100) 7. (4,400) Cash Depreciation Expense Contrib. Capital Earned Capital Revenues 220,000 110,000 0 0 Common Stock 0 0 0 Income Statement Expenses Net Income 0 = 0 0 = 0 0 44,000 110,000 66,000 = 44,000 Sales Cost of Goods Sold 0 = 0 0 (26,400) 0 26,400 (26,400) Wage Expense 0 = 0 0 (2,200) 0 2,200 = (2,200) Interest Expense 0 0 (1,100) 0 1,100 0 Depreciation Expense 0 = 0 0 (4,400) 0 0 = 0 Common Stock b. Prepare the income statement and balance sheet at the end of October. Note: Do not use a negative sign with your answers. Sefcik Co. Income Statement For Month of October Sales revenue $ 110,000 Total expenses Net income 95,700 $ 15,400 Sefcik Co. Retained Earnings Reconciliation For Month of October Retained earnings, October 1 $ 123,123 Net income 15,400 Dividends Retained earnings, October 31 $ 4,400 19,800 Sefcik Co. Balance Sheet Oct 31 Cash $ 198,000 Liabilities $ 308,000 Noncash assets 229,900 Contributed capital 110,000 Retained earnings Total equity 19,800 129,800 Total assets 427,000 Total liabilities and equity $ 427,000