08 Feb Transaction Analysis and Financial StatementsExper
Transaction Analysis and Financial StatementsExpert Consulting Services Inc. was organized on March 1, 2008, by two former college roommates.The corporation provides computer consulting services to small businesses. The followingtransactions occurred during the first month of operations:March 2: Received contributions of $20,000 from each of the two principal owners of the newbusiness in exchange for shares of stock.March 7: Signed a two-year promissory note at the bank and received cash of $15,000.Interest, along with the $15,000, will be repaid at the end of the two years.March 12: Purchased $700 in miscellaneous supplies on account. The company has 30 days topay for the supplies.March 19: Billed a client $4,000 for services rendered by Expert in helping to install a newcomputer system. The client is to pay 25% of the bill upon its receipt and theremaining balance within 30 days.March 20: Paid $1,300 bill from the local newspaper for advertising for the month of March.March 22: Received 25% of the amount billed to the client on March 19.March 26: Received cash of $2,800 for services provided in assisting a client in selecting softwarefor its computer.March 29: Purchased a computer system for $8,000 in cash.March 30: Paid $3,300 of salaries and wages for March.March 31: Received and paid $1,400 in gas, electric, and water bills.Required1. Prepare a table to summarize the preceding transactions as they affect the accounting equation.Use the format in Exhibit 3-1. Identify each transaction with the date.2. Prepare an income statement for the month ended March 31, 2008.3. Prepare a classified balance sheet at March 31, 2008.4. From reading the balance sheet you prepared in (3), what events would you expect to takeplace in April? Explain your answer.