Part A

Indicate the effect of each transaction during the month of October 2009 and the balances for the accounting equation after all transactions have been recorded. An accounting equation has been provided.

a. Opened a business bank account for Ole, Inc., with an initial deposit of $40,000 in exchange for capital stock.

b. Paid rent on the office building for the month of $2,000

c. Received cash for fees earned of $5,000

d. Purchased equipment $7,000

e. Borrowed $20,000 by issuing a note payable

f. Paid salaries for the month $1,000

g. Received cash for fees earned of $8,000

h. Paid dividends, $3,000

i. Paid interest on the note, $100

Part B

Using the information from Part A, prepare

(1) An income statement,

(2) A statement of retained earnings,

(3) A balance sheet,

(4) A statement of cash flows for the month of October.