Problem 3-11 On January 1, 2017, Norma Smith and Grant Wood formed a computer sales and service company in Soapsville, Arkansas, by investing $90,860 cash. The new company, Sandhill Sales and Service, has the following transactions during January 1. Pays $9,000 in advance for 3 months' rent of office, showroom, and repair space 2. Purchases 41 personal computers at a cost of $1,640 each, 7 graphics computers at a cost of $2,640 each, and 26 printers at a cost of $440 each, paying cash upon delivery. 3. Sales, repair, and office employees earn $13,460 in salaries and wages during January, of which $3,860 was still payable at the end of January 4. Sells 31 personal computers at $2,690 each, 5 graphics computers for $3,740 each, and 16 printers for $640 each; $75,860 is received in cash in January, and $36,470 is sold on a deferred payment basis 5. Other operating expenses of $9,260 are incurred and paid for during January; $2,860 of incurred expenses are payable at January 31 SANDHILL SALES AND SERVICE Income Statement January 31, 2017 (1) Cash Basis (2) Accrual Basis Revenues 75860 Expenses Cost of Computers and Printers Salaries and Wages (97160) (9600) (9000) (9260) Rent Other Operating Expenses Total Expenses 125020 Net Income/ (Loss) (49160) SANDHILL SALES AND SERVICE Balance Sheet For the Month Ended January 31, 2017 (1) Cash Basis (2) Accrual Basis Assets Cash 41700 41700 Accounts Receivable 36470 Inventory Prepaid Rent 6000 Total Assets 41700 Liabilities and Owners' Equity Accounts Payable 2860 Salaries and Wages Pay 3860 owner's equity 41700 Total Liabilities and Owner's Equity 41700