MakingitHappen.com is an Internet wholesaler of a variety of commercial software applications. On January 1, 2007, the company's balance sheet appeared as follows (all amounts are in thousands of dollars):
During the first quarter of the current year (January, February, March), the following events occurred.
A. New office furniture costing $500 was purchased on the last day of March. This was to be used in a new sales office that was scheduled to open April 1. The office furniture was paid for in cash.
B. Wages and salaries totaling $3,200 were paid. Of this amount, 20% was to liquidate wages payable that arose in the fourth quarter of the previous year. The company has a policy of not making wage or salary advances to employees.
C. All accounts receivable outstanding at January 1 were collected.
D. The company's advertising agency billed the firm $1,000 for a campaign that had run during the current quarter. The company is planning to pay the bill during April.
E. Sales totaling $18,000 were made to customers. Of these sales, 60% was collected during the first quarter, and the balance is expected to be collected during the next quarter. The goods that were sold had cost the company $13,000 when they were purchased.
F. Dividends were declared and paid to stockholders in the amount of $1,500.
G. Inventory (software programs) costing $10,500 was purchased, of which 10% was paid for by the end of the quarter.
H. A 3-year, $4,000, 12% loan was obtained from a local bank on the last day of the quarter.
I. New shares of stock were sold by the company for $2,000 in cash.
J. A new 3-year lease agreement was signed and executed. The lease required that a $900 monthly rental be paid in advance for the first 2 quarters of the current year. (Total paid is $5,400 = $900 X 6 months.)
K. The accountants calculated that depreciation totaling $350 should be recorded for the quarter for the firm's buildings and equipment.
L. The land that had been held for plant expansion was sold for $9,000.
Required: Prepare any summary documents you believe might help management (or interested external parties) better understand the effectiveness or efficiency of the firm's first quarter transformation process. Did the company have a satisfactory first quarter?