Steve Sims started a consulting business on January 1, 2012, and the business engaged in the following transactions during the year:
1. Issued $20,000 of common stock for cash
2. Delivered services on account, $200,000
3. Incurred $127,000 of operating expense, paid $57,000 cash, the rest on account
4. Collected $165,000 of the revenue that was previously recorded on account
5. Obtained a bank loan of $25,000 to purchase a truck
Required:
a) Write the accounting equation.
b) Show the effects of the above transactions on the accounting equation.
c) Prepare an income statement for 2012. Use proper form and be sure to show your calculations.