The transactions relating to the formation of Blue Company Stores Incorporated, and its first month of operations follow.

1. The firm was organized and the stockholders invested cash of $30,000.
2. The firm borrowed $20,000 from the bank; a short-term note was signed.
3. Display cases and other store equipment costing $16,800 were purchased for cash. The original list price of the equipment was $21,000, but a 20% discount was received because the seller was having a sale.
4. A store location was rented, and $4,500 was paid for the first month's rent.
5. Inventory of $40,000 was purchased; $25,000 cash was paid to the suppliers, and the balance will be paid within 30 days.
6. During the first week of operations, merchandise that had cost $16,000 was sold for $23,000 cash.
7. A newspaper ad costing $300 was arranged for; it ran during the second week of the store's operations. The ad will be paid for in the next month.