2-47 Analysis of Transactions, Preparation of Statements (Alternates are 2-48, 2-50, 2-52, and 2-54.) The Montero Company, a wholesale distributor of furnace and air conditioning equipment, began business on July 1, 20X2The following summa- rized transactions occurred during July a. Montero's stockholders contributed $300,000 in cash in exchange for their common stock. b. On July 1, Montero signed a 1-year lease on a warehouse, paying $48,000 cash in advance for occupancy of 12 months. c. On July 1, Montero acquired warehouse equipment for $100,000. A cash down payment of $40,000 was made, and a note payable was signed for the balance d. On July 1, Montero paid $24,000 cash for a 2-year insurance policy covering fire, casualty and related risks. e. Montero acquired assorted merchandise for $35,000 cash. f. Montero acquired assorted merchandise for $190,000 on open account. g. Total sales were $205,000, of which $30,000 were for cash. h. Cost of inventory sold was $155,000 i. Rent expense was recognized for the month of July j. Depreciation expense of $2,000 was recognized for the month k. Insurance expense was recognized for the month. I. Collected $45,000 from credit customers. m. Disbursed $80,000 to trade creditors. For simplicity, ignore all other possible expenses. Required I. By using the balance sheet equation format demonstrated in Exhibit 2-3 (p. 49), prepare an analysis of each transaction. Show all amounts in thousands. What do transactions (h)-(m) illustrate about the theory of assets and expenses? (Use a Prepaid Insurance account, which is not illustrated in Exhibit 2-3.) 2. Prepare an income statement for July on the accrual basis. Ignore income taxes 3. Prepare a balance sheet for July 31, 20X2