Transaction Analysis, Trial Balance, and Financial StatementsOn December 1, a group of individuals formed a corporation to establish theArcadia News, a neighborhood newspaper featuring "Help wanted" ads of individuals and advertising by local firms. The free paper will be mailed to about 20,000 local residents; revenue will be generated from advertising and want ads. The December transactions are summarized below:

The following transactions occurred during the month of December:

1	Sold common stock of Arcadia News, for cash.	$60,000
2	Paid December rent on furnished office.	5,000
3	Purchased on account, T-shirts displaying company,
	logo. The T-shirts were distributed at a grand opening.	550
4	Paid amount owed to creditor on account.	350
5	Collected "Help wanted" ad revenue in cash.	2,800
6	Paid post office for cost of bulk mailing.	710
7	Billed various firms for advertising in the first two issues of newspaper,	6,300
8	Paid Courier Service for transporting newspapers to post office.	70
9	Paid for printing newspaper.	3,900
10	Collected "Help wanted" ad revenue in cash.	4,570
11	Received invoice for December utilities, to be paid in January.	510
12	Paid for printing newspaper.	4,900
13	Paid December salaries.	6,100
14	Billed various firms for advertising in two issues of the newspaper.	8,950
15	Paid post office for cost of bulk mailing.	630
16	Paid Courier Service for transporting newspapers to post office.	60
17	Collected on accounts receivable.	5,100
18	Purchased fax machine for office in exchange,
	for a six month note payable.	3,100

Required a. Set up accounts for the following: Cash, Accounts Receivable, Office Equipment, Accounts Payable, Notes Payable, Common Stock, Advertising Revenue, Want Ad Revenue, Printing Expense, Advertising Expense, Utilities Expense, Salaries Expense, Rent Expense, and Delivery Expense. Prepare journal entries in a general journal and record the foregoing transactions in the accounts.

a.

Dec.	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue	(1)	$Answer	$Answer
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue		Answer	Answer
	To record issuance of common stock.
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue	(2)	Answer	Answer
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue		Answer	Answer
	To record payment of office rent.
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue	(3)	Answer	Answer
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue		Answer	Answer
	To record purchase on account for T-shirts used for advertising.
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue	(4)	Answer	Answer
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue		Answer	Answer
	To record payment owed on account.
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue	(5)	Answer	Answer
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue		Answer	Answer
	To record collection want ad revenue.
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue	(6)	Answer	Answer
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue		Answer	Answer
	To record payment to post office for bulk mailing.
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue	(7)	Answer	Answer
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue		Answer	Answer
	To record billing for advertising.
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue	(8)	Answer	Answer
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue		Answer	Answer
	Tor record payment for courier service.
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue	(9)	Answer	Answer
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue		Answer	Answer
	To record payment for printing.
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue	(10)	Answer	Answer
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue		Answer	Answer
	To record collection of want ad revenue.
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue	(11)	Answer	Answer
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue		Answer	Answer
	To record December utilities invoice.
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue	(12)	Answer	Answer
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue		Answer	Answer
	To record payment for printing.
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue	(13)	Answer	Answer
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue		Answer	Answer
	To record payment of salaries.
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue	(14)	Answer	Answer
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue		Answer	Answer
	To record billings for advertising.
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue	(15)	Answer	Answer
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue		Answer	Answer
	To record payment to post office for bulk mailing.
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue	(16)	Answer	Answer
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue		Answer	Answer
	To record payment for courier service.
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue	(17)	Answer	Answer
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue		Answer	Answer
	To record collection of receivables.
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue	(18)	Answer	Answer
	AnswerAccounts PayableAccounts ReceivableAdvertising ExpenseAdvertising RevenueCashCommon StockDelivery ExpenseNotes PayableOffice EquipmentPrinting ExpenseRent ExpenseSalaries ExpenseUtilities ExpenseWant Ad Revenue		Answer	Answer
	To record purchase of fax machine.

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Question text

Transaction Analysis, Trial Balance and Financial Statements Below are the T-account balances as December 31 for Arcadia News.

Bal	50,750

Bal	10,150

Bal	3,100

	Bal	60,000

	Bal	710

	Bal	3,100

Bal	8,800

	Bal	15,250

	Bal	7,370

Bal	5,000

Bal	510

Bal	550

Bal	6,100

Bal	1,470

Required

b. Prepare a trial balance as of December 31.

c. Prepare an income statement for the month of December.

d. Prepare a balance sheet as of December 31. (Note: In this problem the net income for December becomes the amount of retained earnings at December 31.)

b.

		Debit		Credit
Cash		$Answer		$Answer
Accounts Receivable		Answer		Answer
Office Equipment		Answer		Answer
Accounts Payable		Answer		Answer
Notes Payable		Answer		Answer
Common Stock		Answer		Answer
Advertising Revenue		Answer		Answer
Want Ad Revenue		Answer		Answer
Printing Expense		Answer		Answer
Advertising Expense		Answer		Answer
Utilities Expense		Answer		Answer
Salaries Expense		Answer		Answer
Rent Expense		Answer		Answer
Delivery Expense		Answer		Answer
Totals		$Answer		$Answer

c.

Revenue
Advertising Revenue	$Answer
Want Ad Revenue	Answer
Total Revenues			$Answer
Expenses
Printing Expense	Answer
Advertising Expense	Answer
Utilities Expense	Answer
Salaries Expense	Answer
Rent Expense	Answer
Delivery Expense	Answer
Total Expenses			Answer
Net Income			$Answer

d.

Assets		Liabilities
AnswerCashAccounts ReceivableAccounts PayableCommon StockRetained EarningsNotes Payable	$Answer	AnswerCashAccounts ReceivableAccounts PayableCommon StockRetained EarningsNotes Payable	$Answer
AnswerCashAccounts ReceivableAccounts PayableCommon StockRetained EarningsNotes Payable	Answer	AnswerCashAccounts ReceivableAccounts PayableCommon StockRetained EarningsNotes Payable	Answer
Office Equipment	Answer	Total Liabilities	Answer
		Stockholders' Equity
		AnswerCashAccounts ReceivableAccounts PayableCommon StockRetained EarningsNotes Payable	Answer
		AnswerCashAccounts ReceivableAccounts PayableCommon StockRetained EarningsNotes Payable	Answer
		Total Stockholders' Equity	Answer
Total Assets	$Answer	Total Liabilities and Stockholders' Equity	$Answer