Preparation of worksheet for balance sheet transactions. Veronica Regaldo creates a new business firm in Mexico on January 2, Year 8, to operate a retail store. Transactions of Regaldo Department Stores during January in preparation for opening its first retail store in February appear below:

(1) January 2: Receives Ps500,000 from Veronica Regaldo for all of the common stock of Regaldo Department Stores. The stock has no par or stated value.

(2) January 5: Pays another firm Ps20,000 for a patent and pays the Mexican government Ps 4,000 to register the patent.

(3) January 10: Orders merchandise from various suppliers at a cost of Ps200,000. See transactions (5), (6), and (7) below for later information regarding these merchandise orders.

(4) January 15: Signs a lease to rent land and a building for Ps30,000 a month. The rental period begins February 1. Regaldo pays Ps60,000 for the first two months' rent in advance.

(5) January 20: Receives the merchandise ordered on January 10. Regaldo delays payment for the merchandise until it receives an invoice from the supplier-see transaction (7) below.

(6) January 21: Discovers that merchandise costing Ps8,000 is defective and returns the items to the supplier.

(7) January 25: Receives invoices for Ps160,000 of the merchandise received on January 20. After subtracting an allowed discount of 2 percent of the invoice for paying promptly, Regaldo pays the suppliers the amount due of Ps156,800 (.98 \(\times\) Ps160,000). The firm treats cash discounts taken as a reduction in the acquisition cost of the merchandise.

(8) January 30: Obtains fire and liability insurance coverage from Windwards Islands Insurance Company for the period beginning February 1, Year 8. It pays the one-year insurance premium of Ps12,000.

a. Create a worksheet with columns labeled Transaction Number, Cash, Inventories, Other Assets, Liabilities, Common Stock, and Retained Earnings. Indicate the effect of each of the eight transactions above on these balance sheet accounts.

b. Prepare a balance sheet for Regaldo Department Stores on January 31, Year 8.