Question - The following transactions occurred during a recent year:
a. Paid wages of $1,550 for the current period (example).
b. Borrowed $7,750 cash from local bank using a short-term note.
c. Purchased $3,100 of equipment on credit.
d. Earned $620 of sales revenue; collected cash.
e. Received $1,240 of utilities services, on credit.
f. Earned $2,620 of service revenue, on credit.
g. Paid $465 cash on account to a supplier.
h. Incurred $105 of travel expenses; paid cash.
i. Earned $620 of service revenue; collected half in cash, with balance on credit.
j. Collected $170 cash from customers on account.
k. Incurred $440 of advertising costs; paid half in cash, with balance on credit.
Required:
1. For each of the transactions, complete the table below, indicating the account, amount, and direction of the effect (+ for increase and - for decrease) of each transaction under the accrual basis. Include revenues and expenses as subcategories of stockholders' equity, as shown for the first transaction, which is provided as an example. Also, determine the company's preliminary net income.
2. Determine the company's preliminary net income.