AJ. Smith Company started business on January 1, 2020, and the following transactions occurred in its first year: 4. 6. 1. On January 1, the company issued 14,800 common shares at $25 per share. 2. On January 1, the company purchased land and a building from another company in exchange for $88,000 cash and 6,000 shares. The land's value is approximately one-quarter of the total value of the transaction. (Hint: You need to determine a value for the shares using the information given in transaction 1, and the land and building should be recorded in separate accounts.) 3. On March 31, the company rented out a portion of its building to Frantek Company. Frantek is required to make quarterly payments of $8,800 on March 31, June 30, September 30, and December 31 of each year. The first payment, covering the period from April 1 to June 30, was received on March 31, and the other payments were all received as scheduled. 4 Equipment worth $129,000 was purchased on July 1, in exchange for $64,500 cash and a one-year note with a principal amount of $64,500 and an interest rate of 10%. No principal or interest payments were made during the year. 5. Inventory costing $256,000 was purchased on account. 6. Sales were $361,500, of which credit sales were $311,500. 7. The inventory sold had a cost of $182,000. Payments to suppliers totalled $207,000. Accounts receivable totalling $210,000 were collected. 10. Operating expenses amounted to $57,000, all of which were paid in cash. 11. The building purchased in transaction 2 is depreciated using the straight-line method, with an estimated useful life of 20 years and an estimated residual value of $31,000. 12. The equipment purchased in transaction 4 is depreciated using the straight-line method, with an estimated useful life of 10 years and an estimated residual value of $6,300. Because the equipment was purchased on July 1, only a half year of depreciation is recognized in 2020. 13. Dividends of $24,600 were declared during the year, of which $6,000 remained unpaid at year end. 14. Interest expense on the note payable from transaction 4 was recorded. 8. 9. Show the effects of the transactions on the basic accounting equation. (Round answers to the nearest whole dollar, e.g. 5,275. If an amount reduces the account balance then enter with negative sign. Indicate whether it is Revenue, Expense or Dividend declared in the last column. In case if there is no effect then select "Not Applicable") Show the effects of the transactions on the basic accounting equation. (Round answers to the nearest whole dollar, e.g. 5,275. If an amount reduces the account balance then enter with negative sign. Indicate whether it is Revenue, Expense or Dividend declared in the last column. In case if there is no effect then select "Not Applicable") Assets Trans. Cash Accounts Receivable Inventory Land 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. Totals Prepare a statement of income for 2020. (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) AJ. Smith Company Statement of Income $ $ $ $ Prepare a statement of changes in equity for 2020. A. J. Smith Company Statement of Changes in Equity Number of Common Shares Share Capital - Common Shares Retained Earnings $ $