Analyze transactions from the accounting equation; prepare the four financial statements; and calculate the current ratio. The following accounting equation worksheet shows the transactions for Jackie Knight's Furniture Repairs, a corporation, for the first month of business November 2007. (LO 4, 5, 7)

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a. Analyze each transaction in the accounting equation worksheet and describe the underlying exchange that resulted in each entry.

b. Has the company been profitable this month? Explain.

c. Prepare an income statement for the month ended November 30, 2007.

d. Prepare a statement of shareholders' equity for the month ended November 30, 2007.

e. Prepare a statement of cash flows for the month ended November 30, 2007.

f. Prepare a balance sheet at November 30, 2007.
g. Calculate the current ratio at November 30,2007 . What does this ratio measure?

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Assets Liabilities Long-term Shareholders' Equity Accounts Accounts notes Common Cash receivable Supplies payable payable stock 1 $2,000 $2,000 2 4,000 3 (5,000) 4 1,500 5 8,000 6 4,000 4,000 7 6,000 (6,000) 8 (400) (400) 9 (3,100) 10 (200) 4,000 Common stock Retained earnings (5,000) Operating expenses 1,500 Service revenue 8,000 Service revenue (3,100) Salary expense (200) Dividends