The company estimates that $3\%$ of its accounts receivable balance will be uncollectable.

Economic Events

February $1.$ Nicole sold one$-$half of the training equipment purchased in January for cash.

The sale resulted in a profit of $$300.$ Hint: determine the book value of the equipment sold

and then determine the selling price. Profit $=$ selling price $$ book value.

February $1.$ Nicole obtained a line of credit with Commerce Bank for $$25,000.$ The interest

rate on the line of credit is $9\%.$ Payments of interest and $5\%$ of outstanding balance are due

on the last day of each month.

February $2.$ Nicole obtained $$8,000$ from the line of credit established on February $1.$

February $1.$ Nicole purchased a van for $$42,000$ plus $6\%$ sales tax by paying $$10,000$ cash

and issuing a $60$ month installment note for the balance. The monthly payment on the note

is $$667.$ Nicole estimates the van to have a $6-$year useful life and a salvage value of

$$15,000.$

February $2.$ Nicole hired a part$-$time assistant to begin working on February $15.$ The

assistant is paid $$2,000$ per month on the $15$th day of the month with the first payment due

on March $15.$

February $9.$ DunnRite Training purchased $$3,000$ in office supplies on account.

February $10.$ DunnRite Training paid for the inventory purchased on January $10.$

February $14.$ DunnRite purchased $100$ logoed tank tops for $$9$ per tank and $75$ logoed t$-$

shirts for $$10$ per t$-$shirt. This inventory was purchased on account with payment due in $30$

days.

February $15.$ DunnRite Training received $$9,000$ cash for training services February $1$ to

February $14.$

February $17.$ DunnRite Training performed $$3,000$ of training services on account. Payment

is due in $30$ days.

February $17.$ DunnRite Training received payment in full for all training services performed

on account in January.

February $19.$ Lynne Lulu, one of Nicole$$s clients, filed a lawsuit against DunnRite Training for

$$75,000.$ The lawsuit alleges that Nicole did not take proper precautions during a training

session. While Ms$.$ Lulu did not receive any physical injuries, she claims that the lack of care

resulted in emotional distress that prevents her from training. Nicole consulted an attorney

which stated that the likelihood of any payment to Ms$.$ Lulu is remote.

February $20.$ DunnRite Training completed $$2,000$ training for Champions Scholastic

Programs on account. Payment is due in $30$ days.

February $25.$ DunnRite Training paid $$3,500$ in dividends.

February $29.$ DunnRite Training received $$8,000$ cash for training services to be performed

from March $1$ to March $31.$

February $29.$ DunnRite sold $105$ tanks during the month of February for $$20$ per tank and

$67$ t$-$shirts at $$25$ per t$-$shirt. All customers paid cash at the time of purchase.

February $29.$ Nicole completed an inventory of supplies and determined that $$800$ was on

hand.

February $29.$ Nicole made the first payment on the installment note issued on February $1.$

February $29.$ Nicole made the minimum payment due on the line of credit with Commerce

Bank.

Assignment

$1.$ Record the transactions using the horizontal balance sheet method used

throughout the course.

$$ Set up an Excel spreadsheet with all the accounts identified in part $1$ of this

assignment listed in the spreadsheet's columns. Accounts should appear in

the following order:

$$ Assets

$$ Liabilities

$$ Equity

$$ Revenue

$$ Expense

$$ Record each transaction in the rows under the account name.

$$ The last two columns should be for the statement of cash flows. Indicate the

amount of the change in cash $(+,-)$ and the type of cash flow $($e$.$g$.,$ Investing,

Financing, Operating$)$

$$ Record any necessary adjusting entries in the spreadsheet.

$2.$ Prepare comparative financial statements