Consider the following January transactions: On January 1, 20X1, three persons, James, Bosh, and Wade, formed JBW Corporation. JBW is a wholesale distributor of electronic equipment. The company issued 10,000 shares of common stock ($1 par value) to each of the three investors for $10 cash per share. Use two stockholders equity accounts: Capital Stock (at par) and Additional Paid-in Capital. JBW acquired merchandise inventory of $75,000 for cash. JBW acquired merchandise inventory of $85,000 on open account. JBW returned for full credit unsatisfactory merchandise that cost $11,000 in transaction 3. JBW acquired equipment of $40,000 for a cash down payment of $10,000, plus a 3-month promissory note of $30,000. As a favor, JBW sells equipment of $4,000 to a business neighbor for cash. The equipment had cost $4,000. JBW pays $16,000 on the account described in transaction 3. JBW buys merchandise inventory of $100,000. The company pays one-half of the amount in cash, and owes one-half on open account. Wade sells one-half of his common stock to Nowitzki for $13 per share.

Required

1. By using a format similar to Exhibit 1-2, prepare an analysis showing the effects of the January transactions on the financial position of JBW Corporation.

2. Prepare a balance sheet as of January 31, 20X1.

Store + Equipment + Liabilitles + Owner's Equity Note Accounts Lopez. Payable + Payable + Capital +400.000 +100,000 EXHIBIT Biwheels Company Analysis of Transactions for January 2 to January 12, 20X2 Description of Transactions Assets Merchandise Cash Inventory (1) Initial investment +400,000 (2) Loan from bank +100,000 (3) Acquire store equipment for cash -15.000 (4) Acquire inventory for cash -120.000 +120.000 (5) Acquire inventory on credit +10.000 (6) Acquire inventory for cash plus credit -10,000 +30,000 (7) Sale of equipment +1,000 (8) Return of inventory acquired on January 6 800 (9) Payment to creditor -4.000 Balance, January 12, 20X2 352.000 + 159.200 +15.000 = +10.000 +20.000 -1,000 -800 -4.000 25.200+ 14.000 100.000 + 400.000 525,200 525,200