Dynamic Services Inc. was organized on March 1, 2012, by two former college roommates. The corporation will provide computer tax services to small businesses. The following transactions occurred during the first month of operations:

March 2: Received contributions of $10,000 from each of the two principal owners in exchange for shares of stock.

March 7: Signed a two-year promissory note at the bank and received cash of $7,500. Interest, along with the $7,500, will be repaid at the end of the two years.

March 12: Purchased miscellaneous supplies on account for $350, payment due in 30 days.

March 19: Billed a client $2,000 for tax preparation services. According to an agreement between the two companies, the client is to pay 25% of the bill upon its receipt and the remaining balance within 30 days.

March 20: Paid a $650 bill from the local newspaper for advertising for the month of March.

March 22: Received 25% of the amount billed the client on March 19.

March 26: Received cash of $1,400 for services provided in assisting a client in preparing its tax return.

March 29: Purchased a computer system for $4,000 in cash.

March 30: Paid $1,650 in salaries and wages for March.

March 31: Received and paid $700 of gas, electric, and water bills.

Required

1. Prepare a table to summarize the preceding transactions as they affect the accounting equation.

Use the format in Exhibit 3-1. Identify each transaction with the date.

2. Prepare an income statement for the month ended March 31, 2012.

3. Prepare a classified balance sheet at March 31, 2012.

4. From reading the balance sheet you prepared in part (3), what events would you expect to take place in April? Explain your answer.