David Sinclair operates a widget shop. The shop specializes in a selection of various widget products. You have been hired as manager. Your duties include maintaining the stores financial records. The following transactions occurred during January, of this year. a. Received a total of $20,000 cash and $20,000 new machinery for common stock. b. Paid six months rent for the store at $1,725 per month (five months are prepaid). c. Purchased and received inventory for $50,000 on account (2/10 and n/30 days.) d. Purchased supplies for $8,600 cash. e. Made sales on account for $45,000 with the costs of $28,000 at 2/10, n/30. f. Negotiated and signed a two-year $36,000 loan at the bank, receiving cash at the time. g. Used the money from (f) to purchase several computers for $5,750; then used the balance for equipment for the shop. h. Received payment for sales in (e) within the discount period. i. Paid expenses: advertising expense of $1,200, and salaries of $6,500. j. Made sales for cash totaling $35,000 with a costs of $18,000. k. Made a payment on inventory accounts payable balance of $35,000 from transaction c above within the discount period. l. Collected accounts receivable of $15,000 from customers after discount period. m. Made a repair to equipment $3,700 cash. n. Recorded Deprecation: for the computers of $250, $1,500 for machinery and for the equipment of $4,800. o. Received a cash payment for widgets in advance of $8,000. Will deliver it next month. p. Office supplies on hand at the end of month were $1,500

Required 1. Record journal entries for each of the transactions. 2. Prepare a trial balance. 3. Prepare an income statement at the end of the first month of operations ended January 31. 4. Prepare a statement of retained earnings for the period ended January 31. 5. Prepare a balance sheet as of January 31.

# David's Widget Shop-Merchandising Assets Amount Cash $60,000 Accounts Receivable 20,000 Supplies 2,000 Inventory 40,000 Equipment 100,000 Accumulated (40,000) Depreciation-Equipment Land 20,000 Total Assets $202,000 Liabilities & Equity Accounts Payable Notes Payable Short term Long Term Notes Payable Common Stock Retained Earnings Amount $20,000 32,000 50,000 20,000 80,000 Total Liabilities & Equity $202,000