Kim's Kite Company (a corporation) sells and repairs kites from manufacturers around the world. Its stores are located in rented space in malls and shopping centers. During its first month of operations ended April 30, 2004, Kim's Kite Company completed eight transactions with the dollar effects indicated in the following schedule:

Required: 1. Write a brief explanation of Transactions

(a) through (h). Include any assumptions that you made. 2. Compute the ending balance in each account and prepare an income statement and a classified balance sheet for Kim's Kite Company on April 30, 2004.

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DOLLAR EFFECT OF EACH OF THE EIGHT TRANSACTIONS Accounts (a) (b) (c) Cash Ending (d) (e) (f) (g) (h) Balance $50,000 $(10,000) $(5,000) $ 7,000 $(2,000) $(1,000) $3,000 Accounts receivable Inventory Prepaid expenses 3,000 20,000 (3,000) 1,500 Store fixtures 10,000 Accounts payable 15,000 Unearned revenue $1,200 2,000 Contributed capital 50,000 Sales revenue Cost of sales 10,000 3,000 1,000 Wages expense Rent expense Utilities expense 1,000 500 1,200