The following list is a selection of transactions from Trafalga Inc.'s business activities during 2000 , the first year of operations.

a. Received $\$ 50,000$ cash for capital stock.

b. Paid $\$ 5,000$ cash for equipment.

c. Purchased inventory costing $\$ 18,000$ on account.

d. Sold $\$ 25,000$ of merchandise to customers on account. Cost of goods sold was $\$ 15,000$

e. Signed a note with a bank for a $\$ 10,000$ loan.

f. Collected $\$ 9,500$ cash from customers who had purchased merchandise on account.

g. Purchased land, $\$ 10,000$, and a building, $\$ 60,000$, for $\$ 15,000$ cash and a 30 year mortgage of $\$ 55,000$.

h. Made a first payment of $\$ 2,750$ on the mortgage principal plus $\$ 2,750$ in interest i. Paid $\$ 12,000$ of accounts payable j. Purchased $\$ 1,500$ of supplies on account k. Paid $\$ 2,500$ of accounts payable.

1. Paid $\$ 7,500$ in wages earned during the year

$\mathrm{m}$. Received $\$ 10,000$ cash and $\$ 3,000$ of notes in settlement of customers' accounts n. Received $\$ 3,000$ in payment of a note receivable plus interest of $\$ 250$.

o. Paid $\$ 600$ cash for a utility bill p. Sold excess land for its cost of $\$ 3,000$.

q. Received $\$ 1,500$ in rent for an unused part of a building r. Paid off $\$ 10,000$ note, plus interest of $\$ 1,200$.

1. Set up T-accounts, and appropriately record the debits and credits for each transaction. Leave room for a number of entries in the cash account.

2. Prepare a trial balance.

3. Prepare an income statement for the period. (Ignore income taxes and the EPS computation.)