Mike Han recently left his job at a local pool company to open his own pool and spa maintenance business. Mike Han took all of the money he and his wife had in their personal savings account and used it to open Aqua Elite, Inc. on May 1, 2013. Presented next are the transactions for the first month of operations for Aqua Elite, Inc.:

May 1 Mike invested $15,000 cash and a used truck worth $13,500 in the business in exchange for 2,000 company shares.

3 Paid $4,700 cash to purchase office equipment.

7 Purchased $860 of supplies on account.

12 Performed services for cash customers and received $850.

15 Paid salaries of $675 to the office receptionist.

16 Sold the company truck for $13,500.

18 Signed a note payable for $31,000 to purchase a new truck.

21 Performed $3,200 of services on account for a local hotel chain.

27 Paid $500 of the amount owed from the purchase of supplies on May 7.

30 Received $2,000 on account from credit customers.

31 Received the utility bill for the month of May, $480. The bill is not due until the 15th of June.

31 Paid $1,000 dividends to the shareholder, Mike Han.

Requirements

1. Enter the transactions for Aqua Elite, Inc. for the month of May into the expanded accounting equation. Calculate the ending balances at the end of May.

2. Prepare the income statement for Aqua Elite, Inc. for the first month of operations.

3. Prepare the statement of changes in equity for Aqua Elite, Inc. for the first month of operations.

4. Prepare the statement of financial position for Aqua Elite, Inc. for the first month of operations.

5. Did Mike make a wise decision leaving his job to start Aqua Elite, Inc.?