Kaylee James, a connoisseur of fine chocolate, opened Kaylee's Sweets in Collegetown on February 1. The shop specializes in a selection of gourmet chocolate candies and a line of gourmet ice cream. You have been hired as manager. Your duties include maintaining the store's financial records. The following transactions occurred in February, the first month of operations. a. Received four shareholders' contributions totaling $29,600 cash to form the corporation; issued 300 shares of $0.10 par value common stock.
b. Paid three months' rent for the store at $1,800 per month (recorded as prepaid expenses).
c. Purchased and received candy for $6,500 on account, due in 60 days.
d. Purchased supplies for $1,330 cash.
e. Negotiated and signed a two-year $17,000 loan at the bank, receiving cash at the time.
f. Used the money from (e) to purchase a computer for $2,550 (for recordkeeping and inventory tracking); used the balance for furniture and fixtures for the store.
g. Placed a grand opening advertisement in the local paper for $420 cash; the ad ran in the current month.
h. Made sales on Valentine's Day totaling $3,000; $2,705 was in cash and the rest on accounts receivable.

The cost of the candy sold was $1,200.

i. Made a $650 payment on accounts payable.
j. Incurred and paid employee wages of $1,700.
k. Collected accounts receivable of $180 from customers.
h. Made a repair to one of the display cases for $115 cash.
i. Made cash sales of $3,200 during the rest of the month.
j. The cost of the candy sold was $2,010.

Required:
a. Set up appropriate T-accounts for Cash, Accounts Receivable, Supplies, Inventory, Prepaid Expenses, Equipment, Furniture and Fixtures, Accounts Payable, Notes Payable, Common Stock, Additional Paid-in Capital, Sales Revenue, Cost of Goods Sold (expense), Advertising Expense, Wage Expense, and Repair Expense. All accounts begin with zero balances.
b. Record in the T-accounts the effects of each transaction for Kaylee's Sweets in February.
c. Prepare an income statement at the end of the month ended February 28, 2014.
d. Write a short memo to Kaylee offering your opinion on the results of operations during the first month of business.
e.