John Jacobs lost his job as a carpenter with a contractor when a recession hit the construction industry. Jacobs had been making \(\$ 50,000\) per year. He decided to form his own company, Jacobs Corporation, and do home repairs.

The following is a summary of the transactions of the business during the first three months of operations in 1999 :

Jan. 15 Stockholders invested \(\$ 40,000\) in the business.

Feb. 25 Received payment of \(\$ 4,400\) for remodeling a basement into a recreation room. The homeowner purchased all of the building materials.

Mar. 5 Paid cash for an advertisement that appeared in the local newspaper, \(\$ 150\).

Apr. 10 Received \(\$ 7,000\) for converting a room over a garage into an office for a college professor. The professor purchased all of the materials for the job.

11 Paid gas and oil expenses for automobile, \(\$ 900\).

12 Miscellaneous business expenses were paid, \(\$ 450\).

15 Paid dividends of \(\$ 2,000\).

Required

a. Prepare journal entries for these transactions.

b. Post the journal entries to T-accounts.

c. How profitable is this new venture? Should Jacobs stay in this business?