Elijah Watts operates a widget shop. The shop specializes in a selection of various widget products. You have been hired as manager. Your duties include maintaining the stores financial records. The following transactions occurred during January, of this year.

1. Received cash contributions totaling $40,000 cash for common stock.
2. Paid three months rent for the store at $1,500 per month (two months are prepaid).
3. Purchased and received inventory for $50,000 on account (2/10 and n/30 days.)
4. Purchased supplies for $5,600 cash.
5. Made sales on account of $35,000 with the costs of $18,000 at 2/10, n/30.
6. Negotiated and signed a two-year $24,000 loan at the bank, receiving cash at the time.
7. Used the money from (f) to purchase several computers for $7,750; then used the balance for equipment for the shop.
8. Received payment for sales in (e) within the discount period.
9. Paid expenses: advertising expense of $1,500 and salaries of $5,500.
10. Made sales for cash totaling $25,000 with a cost of $11,000.
11. Made a payment on inventory accounts payable balance of $40,000 from transaction c above within the discount period.
12. Collected accounts receivable of $8,000 from customers after the discount period.
13. Made a repair to equipment $1,700 cash.
14. Recorded Deprecation: for the computers of $750 and for the equipment of $1,800.
15. Received a cash payment for widgets in advance of $5,000. Will deliver it next month.
16. Office supplies on hand at the end of the month were $2,000.

Required

1. Record journal entries for each of the transactions.
2. Prepare a trial balance.
3. Prepare an income statement at the end of the first month of operations ended January 31.
4. Prepare a statement of retained earnings for the period ended January 31.
5. Prepare a balance sheet as of January 31.
6. Write a memo to Elijah offering your opinion on the results of operations during the first month of business.
7. After three years in business, the following data was computed. Based on this information provide a report to Elijah on the performance of the shop. (Dont forget to include ratios.)

Year	2016	2017	2018
Total Assets	$152,500	$158,500	$166,000
Total Liabilities	78,500	82,000	87,500
Total Equity	74,000	76,500	78,500
Sales Revenue	255,000	282,500	293,500
Net Income	24,400	51,000	22,000

Assets	Amount	Liabilities & Equity	Amount
Cash	$30,000	Accounts Payable	$10,000
Accounts Receivable	10,000	Notes Payable Short term	16,000
Supplies	1,000	Long Term Notes Payable	25,000
Inventory	20,000	Common Stock	10,000
Equipment	50,000	Retained Earnings	40,000
Accumulated Depreciation	(20,000)
Land	10,000
Total Assets	$101,000	Total Liabilities & Equity	$101,000