Kendall Corporation began operations on March 1, 2003 and completed the following transactions during its first month of operations.

1. Issued common stock for $100,000.

2. Paid $18,000 for a one-year lease on office space.

3. Purchased office equipment costing $35,000 by paying $5,000 cash and signing a five-year note for the balance.

4. Purchased office supplies on account, $750.

5. Sent a bill for $4,500 to a customer for services performed.

6. Received $1,000 from a customer for services to be performed next month.

7. Paid employees for hours worked, $1,025.

8. Paid half of the amount owed for office supplies in transaction (D), $375.

9. Received, but did not pay, the monthly telephone bill, $275.

10. Paid a dividend to owners, $2,000.

Required:

1. Determine the effect of each of the preceding events on the accounting equation.

2. Prepare the general journal entries to record each of these events. Note you may want to set up T-accounts to keep track of some accounts. Do not prepare the adjusting entries.

3. Prepare the income statement for the period.

4. Prepare the statement of cash flows for the period.

5. Prepare the statement of retained earnings for the period.

6. Prepare the balance sheet at the end of the period.

7. Prepare the closing entries.