Electronics Appliance Corporation begins operations on September 1 and engages in the following transactions during September:

(1) September 1: Issues 4,000,000 shares of common stock for $12 cash per share.

(2) September 2: Issues 600,000 shares of common stock to acquire a patent from another firm. The two entities agree on a price of $7,200,000 for the patent.

(3) September 5: Pays $1,000,000 as two months rent in advance on a factory building that it leases for the three years beginning October 1. Monthly rental payments are $500,000.

(4) September 12: Purchases inventory on account for $6,100,000.

(5) September 15: Receives a check for $900,000 from a customer as a deposit on a special order for equipment that Electronics plans to manufacture. The contract price is $4,800,000.

(6) September 20: Borrowed a 3-year loan of $4,200,000 from WF Bank with an annual interest of 18 percent. Interest will be paid on the last day of every month, and principal will be paid back at the end of the 3^rd year.

(7) September 21: Sells merchandise on account for $7,800,000. The cost of producing the merchandise sold is $4,200,000.

(8) September 28: Issues a cash advance totaling $200,000 to twenty new employees who will begin work on October 1.

(9) September 30: Purchases factory equipment costing $27,500,000. It issues a check for $5,000,000 and assumes a long-term note payable for the balance.

(10) September 30: Pays $450,000 for the labor costs of installing the new equipment in (9).

(11) September 30: Pays $600,000 to selling personnel as salary for the month of September.

(12) September 30: Pays $200,000 to human resources and accounting personnel as salary for the month of September.

(13) September 30: Pays out dividends in the amount of $600,000.

(14) September 30: Income tax rate for Electronics is 24 percent, and monthly tax is paid at the end of every month.

Required:

1. Set up T-accounts and enter each of the fourteen transactions.

2. Indicate the effect of each transaction on the balance sheet equation.

3. Prepare Electronics Appliance Corporations income statement for September, and statement of retained earnings and balance sheet as of September 30.