Transaction Analysis

Gels and Shells, Inc., was established on January 1 and entered into the following transactions during its first month of business:

1. Issued common stock of $50,000 in exchange for cash.

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2. Purchased equipment for $24,000 cash.

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3. Purchased supplies of $6,000 on account.

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4. Received $235 bill for January advertising in the newspaper.

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5. Billed customers $14,680 for services.

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6. Paid salaries of $2,015.

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7. Received payment of $6,023 from customers for bills in #5.

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8. Received $5,000 cash for services to be performed in March.

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9. Paid $4,500 to suppliers for purchase in #3.

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10. Received bill for January utilities in the amount of $175.

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11. Paid dividends of $300 to stockholders.

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12. Borrowed $10,000 from bank on a long-term basis.

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13. Paid $100 interest on the bank loan.

Required

a. Show the effects of each transaction on the accounting equation by preparing a tabular analysis using the following column headings: Cash, Accounts Receivable, Supplies, Property and Equipment, Accounts Payable, Unearned Revenue, Notes Payable, Common Stock, Retained Earnings.

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b. Prepare an income statement for the month of January.

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c. Prepare a statement of retained earnings for the month of January.

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d. Prepare a balance sheet at January 31.