Refer to Problem 2-41B. After completing the trial balance in Problem 2-41B, prepare the following financial state- ments for Serrano Carpet Installers: 

1. Income statement for the month ended January 31, 2007.  

2. Statement of owner's equity for the month ended January 31, 2007. 

3. Balance sheet at January 31, 2007. 

Draw arrows to link the statements. If needed as a guide for preparing the financial statements.

Problem 2-41B

Vince Serrano started Serrano Carpet Installers, and during the first month of operations (January 2007) he completed the following selected transactions:

a. Serrano began the business with an investment of \(\$ 40,000\) cash and a van (automobile) valued at \(\$ 20,000\). The business gave Serrano owner's equity in the firm.

b. Paid \(\$ 32,000\) for equipment.

c. Purchased supplies on account, \(\$ 400\).

d. Paid employee's salary, \(\$ 1,300\).

e. Received \(\$ 800\) for a carpet installation job.

f. Received a \(\$ 500\) bill for advertising expense that will be paid in the near future.

g. Paid the account payable created in transaction (c).

h. Installed carpet for a hotel on account, \(\$ 3,300\).

i. Received cash on account, \(\$ 1,100\).

j. Paid the following cash expenses and made a single compound entry:

(1) Rent, \(\$ 1,000\).

(2) Insurance, \(\$ 600\).

k. Withdrew \(\$ 2,600\) for personal use.

Requirements 

1. Open the following four-column accounts: Cash; Accounts Receivable; Supplies; Equipment; Automobile; Accounts Payable; Vince Serrano, Capital; Vince Serrano, Withdrawals; Service Revenue; Salary Expense; Rent Expense; Advertising Expense; Insurance Expense.

2. Record the transactions in the journal. Use the letters to identify the transactions. 

3. Post to the accounts and keep a running balance for each account. 

4. Prepare the trial balance of Serrano Carpet Installers at January 31, 2007.