The following transactions occurred during a recent year:
a. Paid wages of $250 for the current period (example).
b. Borrowed $1,250 cash from local bank using a short-term note.
c. Purchased $500 of equipment on credit.
d. Earned $100 of sales revenue; collected cash.
e. Received $200 of utilities services, on credit.
f. Earned $450 of service revenue, on credit.
g. Paid $75 cash on account to a supplier.
h. Incurred $20 of travel expenses; paid cash.
i. Earned $100 of service revenue; collected half in cash, with balance on credit.
j. Collected $50 cash from customers on account.
k. Incurred $100 of advertising costs; paid half in cash, with balance on credit.
Required:1. For each of the transactions, make a table 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. Also, determine the company’s preliminary net income. (Enter any decreases to account balances with a minus sign.)
2. Determine the company’s preliminary net income.