Problem 3-11 On January 1, 2017, Norma Smith and Grant Wood formed a computer sales and service company in Soapsville, Arkansas, by investing $91,164 cash. The new company, Ayayai Sales and Service, has the following transactions during January.

1. Pays $12,000 in advance for 3 months rent of office, showroom, and repair space. 2. Purchases 45 personal computers at a cost of $1,656 each, 11 graphics computers at a cost of $2,656 each, and 30 printers at a cost of $456 each, paying cash upon delivery. 3. Sales, repair, and office employees earn $13,764 in salaries and wages during January, of which $4,164 was still payable at the end of January. 4. Sells 35 personal computers at $2,706 each, 9 graphics computers for $3,756 each, and 20 printers for $656 each; $76,164 is received in cash in January, and $65,470 is sold on a deferred payment basis.

5. Other operating expenses of $9,564 are incurred and paid for during January; $3,164 of incurred expenses are payable at January 31.

1) Using the transaction data above, prepare (1) a cash-basis income statement and (2) an accrual-basis income statement for the month of January.

2) Using the transaction data above, prepare (1) a cash-basis balance sheet and (2) an accrual-basis balance sheet as of January 31, 2017.

AYAYAI SALES AND SERVICE Income Statement For the Month Ended January 31, 2017 (1) Cash Basis (2) Accrual Basis