Shrinkers Inc, a weight loss clinic in Waterloo, began operations in November of the current year with the following transactions occurring during the month: Nov. 1 Sold 5,000 common shares (share capital) for $12 per share. 2 Paid $3,600 for three months' rent in advance. 5 Purchased $8,000 of equipment paying 25% down and borrowing the balance from the vendor as a Note Payable and agreeing to pay it back in two years at 0% interest. 6 Purchased merchandise inventory for $9,700 on credit. 7 Sold gym fitness memberships to customers for the month of November, on account for $13,000. 15 Paid wages of $1,200. 20 Collected $4,000 from customers on account. 25 Paid suppliers $3,000 on account for inventory purchased on November 6. 30 Paid wages of $1,100. 30 Recognized one month's rent expense that was used in November. 30 Recognized one month's equipment depreciation expense. The estimated residual value is $800 and the estimated useful life is 5 years.

a) Prepare the formal journal entries in the general journal to record the preceding transactions. Use the module 4 readings, chapter 2: The Accounting Process, section 2.4, Figure 2.2 as a guide

b) Create a table to analyze the preceding transactions in terms of their effects on the accounting equation of Shrinkers Inc. Use the module 2 readings, chapter 1: Introduction to Financial Accounting, section 1.5, page 19, as a guide.

c) Prepare the balance sheet of Shrinkers Inc as at November 30, after recording all the above the transactions. Use the module 4 readings, chapter 2: The Accounting Process, Exhibit 2-2 as a guide. AFM 123 / ARBUS 102 Accounting Information for Managers page 2 of 3