Requirement #7: Prepare the financial statements for Peter's Auto Supply Corporation as of July 31 in the space below. You will only be preparing the Income Statement, Statement of Retained Earnings, and Balance Sheet.

Peter's Auto Supply Corporation: first month of operation July Transactions Date Transaction Description July 1 Issued Common Stock in exchange for $100,000 cash. July 1 Paid $4,000 rent for the months of July and August July 2 Paid the insurance company $2,400 for a one year insurance policy, beginning July 1. July 5 Purchased inventory on account for $35,000 (Assume that the perpetual inventory system is used.) July 6 Borrowed $36,500 from a local bank and signed a note. The interest rate is 10%, and principal and interest is due to be repaid in six months. July 8 Sold inventory on account for $17,000. The cost of the inventory is $7,000. July 15 Paid employees $6,000 salaries for the first half of the month. July 18 Sold inventory for $15,000 cash. The cost of the inventory was $6,000. July 20 Paid $15,000 to suppliers for the inventory purchased on January 5. July 26 Collected $6,000 on account from customers. July 30 Paid $1,000 to the local utility company for July gas and electricity.

Adjustments:

a) One month's insurance has expired. b) One month's prepaid Rent has expired. c) The company accrued salaries of $6,000 that will be paid in August. d) Accrued interest on the note payable amounts to $250. Account Number Account Title 111 Cash 112 Accounts Receivable 115 Inventory 117 Prepaid Rent 119 Prepaid Insurance 212 Accounts Payable 213 Notes Payable 214 Salaries Payable 215 Interest Payable 311 Common Stock 312 Retained Earnings 411 Sales Revenue 500 Cost of Goods Sold 511 Rent Expense 512 Insurance Expense 513 Salaries Expense 514 Interest Expense 515 Utilities Expense