Grace Stewart began the Stewart Answering Service in December. The firm provides services for professional people and is currently operating with leased equipment. On January 1, the assets and liabilities of the business were: Cash, \(\$ 6,400\); Accounts Receivable, \(\$ 6,900\); Accounts Payable, \(\$ 1,600\); and Notes Payable, \(\$ 1,500\). Assume that Retained Earnings as of January 1 were zero. The balance of Common Stock was \(\$ 10,200\). The following transactions occurred during the month of January:

1 Paid rent on office and equipment for January, \(\$ 1,800\).

2 Collected \(\$ 6,000\) on account from clients.

3 Borrowed \(\$ 3,000\) from a bank and signed a note payable for that amount.

4 Billed clients for work performed on account, \(\$ 12,500\).

5 Paid \(\$ 1,400\) on accounts payable.

6 Received invoice for January advertising, \(\$ 800\).

7 Paid January salaries, \(\$ 3,200\).

8 Paid January utilities, \(\$ 430\).

9 Paid stockholders a dividend of \(\$ 3,600\) cash.

10 Purchased a printer (on January 31) for business use, \(\$ 1,400\).

11 Paid \(\$ 30\) to the bank as January interest on the outstanding notes payable.

Required

a. Set up an accounting equation in columnar form with the following individual assets, liabilities, and stockholders' equity accounts: Cash, Accounts Receivable, Equipment, Accounts Payable, Notes Payable, Common Stock, and Retained Earnings. Enter the January 1 balances below each item. The beginning Equipment account balance is \(\$ 0\).

b. Show the impact (increase or decrease) of the January transactions on the beginning balances, and total all columns to show that assets equal liabilities plus stockholders' equity as of January 31.