Problem 1

Sanders Company began operations on January 1, 2019. Sanders had the following transactions for the first quarter of year 2019:

1.Issued $500,000 of Common Stock for cash.

2.On January 1, prepaid $60,000 for one year's worth of rent on the warehouse.

3.On January 2, purchased $85,000 of equipment by paying $25,000 cash and issuing a one-year, 8% note for the balance. The machine depreciates at a rate of $6,000 per YEAR (which equals $1,500 per quarter).

4.Sold $122,000 of merchandise for cash.

5.Purchased $6,500 of supplies on account.

6.On February 4,obtained a five-year, $100,000, 6% loan from Premier National Bank.

7.Sold $95,000 of merchandise on account to Morton Company and $35,000 of merchandise on account to Dalton Company.

8.Paid cash for the supplies purchased in transaction #5.

9.Received $10,000 advanced payment from Salzinger Company for work to be performed in five weeks and $8,000 from Toltzis Company for work to be performed in in the next quarter.

10.Received payment for the $95,000 of goods sold to Morton Company.

11.Purchased $1,400 of supplies for cash.

12.Paid $62,000 of salaries in cash.

13.Paid $1,420 cash for utilities for the period.

14.Paid a $5,000 cash dividend to shareholders.

Adjusting Entries:

15.Completed the job for Salzinger Company (see transaction #9).

16.March 29: Accrued $33,000 of salaries that will be paid in the next quarter.

17.March 29: Accrued $920 of utilities expenses that will be paid in the next quarter.

18.March 29:Recorded the supplies expense for the quarter. A count of supplies indicated that $1,200 of supplies were still on hand.

19.March 29: Recorded accrued interest expense on the two Notes Payable (from items #3 and #6) for the quarter.

20.March 31: Recorded depreciation on the equipment for the quarter (from #3).

21.March 31:Recorded rent expense for the quarter (from item # 2).

Required:

1.Prepare a Financial Statement Effects (FSE) Template for the above transactions. (Please see attached Excel file. The first one has been worked for you to show you what I am looking for).

2.Prepare Journal Entries or T-accounts for the above transactions. (I have included the T-account templates for you, if you choose that option. Since this is the first year of operations, all accounts had a "0" beginning balance.)

3.Prepare a Trial Balance.

BONUS - 50 points

1.Prepare an Income Statement for Sanders Company for the quarter.

2.Prepare a Statement of Retained Earnings for Sanders Company for the quarter.

3.Prepare a Balance Sheet for Sanders Company for the quarter.