1. The following account balances are shown on November 30, 2020, for the Clever Bookstore:

Cash $ 12,000 Accounts payable $ 6,000

Accounts receivable 4,000 Salaries payable 7,000

Inventory 11,000 Notes payable 6,000

Supplies 3,000 J. Clever, capital 11,000

Total $30,000 Total $30,000

The following transactions occurred during December.

1. Paid workers the $7,000 owed them on November 30.

2. Made sales totaling $4,000. Half of the sales were for cash. The other half

were on account. The cost of goods sold was $2500.

3. Purchased inventory on account, $3,000.

4. Collected in cash $1000 of receivables.

5. Used supplies totaling $800.

6. Paid accounts payable of $1200.

7. Paid all Decembers interest on the note payable in the amount of $150.

8. Purchased shoes, boots, socks, and other inventory for $ 4000 on account.

9. Purchased display shelving, chairs, and other fixtures for $2,000 cash and $8,000 on account. Assume a useful life of 10 years.

10. Obtained $6000 and signed a three-year, bank loan at 12% annual interest.

11. Had sales revenue during December of $15,000. Of this amount, $10,000 was received in cash and the balance was on account.

12. Paid $700 to each of two different creditors.

13. Signed an application for a one-year insurance policy and paid the years premium of $1200.

14. Accrued three employees a monthly salary of $1,000 each.

15. Collected $2,000 from (accounts receivable) customers.

Required

1. Analyze all transactions using the basic accounting equation. Begin your analysis by entering the November 30 account balances into a worksheet. Then enter each of the transactions above into your worksheet.

2. Prepare a balance sheet as of December 31, 2020

c. Prepare an income statement for the month ended December 31, 2020