Vanishing Games Corporation (VGC) operates a massively multiplayer online game, charging players a monthly subscription of $13. At the start of January 2018, VGC's income statement accounts had zero balances and its balance sheet account balances were as follows: Cash Accounts Receivable Supplies Equipment Buildings Land Accounts Payable Deferred Revenue Notes Payable (due 2025) Common Stock Retained Earnings $2,230,000 211,000 16,700 928,000 425,000 1,630,000 134,000 132,000 123,000 2,900,000 2,151,700 In addition to the above accounts, VGC's chart of accounts includes the following: Service Revenue, Salaries and Wages Expense, Advertising Expense, and Utilities Expense. The following transactions occurred during the January month: a. Received $71,750 cash from customers on 1/1 for subscriptions that had already been earned in 2017. b. Purchased 10 new computer servers for $40,800 on 1/2; paid $15,600 cash and signed a three-year note for the remainder owed. c. Paid $15,100 for an Internet advertisement run on 1/3. d. On January 4, purchased and received $4,500 of supplies on account. e. Received $220,000 cash on 1/5 from customers for service revenue earned in January. f. Paid $4,500 cash to a supplier on January 6. g. On January 7, sold 13,800 subscriptions at $13 each for services provided during January. Half was collected in cash and half was sold on account. h. Paid $370,000 in wages to employees on 1/30 for work done in January. i. On January 31, received an electric and gas utility bill for $5,750 for January utility services. The bill will be paid in February Required: 1. Analyze the effect of the January transactions on the accounting equation, and indicate the account, amount, and direction of the effect of each transaction. (Enter any decreases to account balances with a minus sign.) Assets Liabilities Stockholders' Equity 2. Prepare journal entries for the January transactions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet 2 3 4 5 6 7 8 9 Record the $71,750 cash received from customers on 1/1 for subscriptions that had already been earned in 2017. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal 4. Prepare an unadjusted trial balance as of January 31, 2018. VANISHING GAMES CORPORATION Unadjusted Trial Balance Account Name Debit Credit Cash $ 2,301,750 Accounts Receivable Supplies Equipment Buildings Land Accounts Payable Deferred Revenue Notes Payable (long-term) Common Stock Retained Earnings Service Revenue Salaries and Wages Expense Advertising Expense Utilities Expense Total | $ 2,301,750 $ 0 5. Prepare an Income Statement for the month ended January 31, 2018, using unadjusted balances from part 4. VANISHING GAMES CORPORATION Income Statement 6. Prepare a Statement of Retained Earnings for the month ended January 31, 2018, using the beginning balance given above and the net income from part 5. Assume VGC has no dividends. VANISHING GAMES CORPORATION Statement of Retained Earnings Retained Earnings, January 1, 2018 Retained Earnings, January 31, 2018 | $ 7. Prepare a classified Balance Sheet at January 31, 2018, using your response to part 6. VANISHING GAMES CORPORATION Balance Sheet 8. Calculate net profit margin, expressed as a percent. (Round your answer to 1 decimal place.) Net Profit Margin Vanishing Games Corporation (VGC) operates a massively multiplayer online game, charging players a monthly subscription of $13. At the start of January 2018, VGC's income statement accounts had zero balances and its balance sheet account balances were as follows: Cash Accounts Receivable Supplies Equipment Buildings Land Accounts Payable Deferred Revenue Notes Payable (due 2025) Common Stock Retained Earnings $2,230,000 211,000 16,700 928,000 425,000 1,630,000 134,000 132,000 123,000 2,900,000 2,151,700 In addition to the above accounts, VGC's chart of accounts includes the following: Service Revenue, Salaries and Wages Expense, Advertising Expense, and Utilities Expense. The following transactions occurred during the January month: a. Received $71,750 cash from customers on 1/1 for subscriptions that had already been earned in 2017. b. Purchased 10 new computer servers for $40,800 on 1/2; paid $15,600 cash and signed a three-year note for the remainder owed. c. Paid $15,100 for an Internet advertisement run on 1/3. d. On January 4, purchased and received $4,500 of supplies on account. e. Received $220,000 cash on 1/5 from customers for service revenue earned in January. f. Paid $4,500 cash to a supplier on January 6. g. On January 7, sold 13,800 subscriptions at $13 each for services provided during January. Half was collected in cash and half was sold on account. h. Paid $370,000 in wages to employees on 1/30 for work done in January. i. On January 31, received an electric and gas utility bill for $5,750 for January utility services. The bill will be paid in February Required: 1. Analyze the effect of the January transactions on the accounting equation, and indicate the account, amount, and direction of the effect of each transaction. (Enter any decreases to account balances with a minus sign.) Assets Liabilities Stockholders' Equity 2. Prepare journal entries for the January transactions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet 2 3 4 5 6 7 8 9 Record the $71,750 cash received from customers on 1/1 for subscriptions that had already been earned in 2017. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal 4. Prepare an unadjusted trial balance as of January 31, 2018. VANISHING GAMES CORPORATION Unadjusted Trial Balance Account Name Debit Credit Cash $ 2,301,750 Accounts Receivable Supplies Equipment Buildings Land Accounts Payable Deferred Revenue Notes Payable (long-term) Common Stock Retained Earnings Service Revenue Salaries and Wages Expense Advertising Expense Utilities Expense Total | $ 2,301,750 $ 0 5. Prepare an Income Statement for the month ended January 31, 2018, using unadjusted balances from part 4. VANISHING GAMES CORPORATION Income Statement 6. Prepare a Statement of Retained Earnings for the month ended January 31, 2018, using the beginning balance given above and the net income from part 5. Assume VGC has no dividends. VANISHING GAMES CORPORATION Statement of Retained Earnings Retained Earnings, January 1, 2018 Retained Earnings, January 31, 2018 | $ 7. Prepare a classified Balance Sheet at January 31, 2018, using your response to part 6. VANISHING GAMES CORPORATION Balance Sheet 8. Calculate net profit margin, expressed as a percent. (Round your answer to 1 decimal place.) Net Profit Margin