Porter Companys balance sheet at December 31, 2011 has following accounts: Cash $13,100; Account payable $8,750; Account receivable $19,780; Inventory $9,400; Allowance for Doubtful accounts 800 (credited); Owners capital $32,730.

During January 2012, the following transactions occurred:

Jan. 1 - Porter accepted a 4-month, 8% note from Andcrko Company in payment of Anderko's $1,200 account.

Jan. 2 Bad debts arc expected to be 5% of accounts receivable

Jan. 3 Porter wrote off as uncollectible the accounts of Elrich Corporation ($450) and Rio Company ($280).

Jan. 8 Porter purchased $ 17,200 of inventory on account.

Jan. 11 Porter sold for $25,000 on account inventory that cost $17,500.

Jan. 15 Porter sold inventory that cost $700 to Fred Berman for $1,000. Berman charged this amount on his Visa First Bank card. The service fee charged Porter by First Bank is 3 %.

Jan. 17 Porter collected $22,900 from customers on account.

Jan. 21 Porter paid $ 16,300 on account payable.

Jan. 24 Porter received payment in full ($280) from Rios Company on the account written off on January 3.

Jan. 27 Porter purchased advertising supplies for $1,400 cash

Jan. 30 Porter paid other operating expenses, $3,218.

Jan. 31 A count of advertising supplies which were bought on January 27, reveals that $560 remains unused. They were returned.

Apr. 1 Received payment in frill from Anderko Company on note due

Apr. 5 Sold accounts receivable of $8,000 to Harcot Factor. Flarcot Factor assesses a service charge of 2% of the amount of receivables sold.

Instructions:

a) Journalize the transactions.

b) Prepare the Balance Sheet and Income Statement including initial balances and all transactions.