Selected accounts from Taylor Company as of March 31, 2012, follow:

Cash $ 5,300
Inventory 10,250
Prepaid rent 100
Plant 40,500
Accumulated depreciation, plant 10,000
Accounts payable 6,300
Paid in capital 20,000
Retained earnings ?

In addition, the following transactions occurred in the month of March.
1. Depreciation for the month amounted to $700
2. Purchased inventory on account for $3,000
3. Returned a portion of the inventory deemed defective for $200
4. Paid creditors $2,200 for inventory purchased in #2
5. Paid 6 months' rent of $600 in advance, covering April 1, 2012 through September 30, 2012. The contract price did not increase from the previous 6 months' period and covered October 1, 2011 through March 31, 2012
6. Sold inventory for $4,100 cash that cost Taylor Company $2,600

Required:
1. Journalize the transactions for Taylor Company.
2. Prepare an analysis of the transactions using the balance sheet equation.
3. Prepare an income statement for the month ending March 31.
4. Prepare a balance sheet at March 31.

1. Depreciation expense 700
Accumulated depreciation, plant 700
2. Inventory 3,000
Accounts payable 3,000
3. Accounts payable 200
Inventory 200
4. Accounts payable 2,200
Cash 2,200
5. Prepaid rent 600
Cash 600
Rent expense 100
Prepaid rent 100
6. Cash 4,100
Sales revenue 4,100
Cost of goods sold 2,600
Inventory 2,600

2.
Trans-
action Cash Inventory Prepaid Rent Plant Accum.
Depr. Accounts Payable Paid in Capital Retained Earnings
Beg. bal. $5,300 $10,250 $100 $40,500 ($10,000 ) $6,300 $20,000 $19,850
1. (700 ) -700
2. +3,000 +3,000
3 . -200 -200
4. -2,200 -2,200
5. -600 +600
-100 -100
6. +4,100 +$4,100
-2,600 -2,600
End. Bal. $6,600 $10,450 $600 $40,500 ($10,700 ) $6,900 $20,000 $20,550

3. Taylor Company
Income Statement
For the Month Ended March 31, 2012

Sales revenue $ 4,100
Cost of goods sold 2,600
Rent expense 100
Depreciation expense 700
Net income $700

4. Taylor Company
Balance Sheet
March 31, 2012

Assets:
Cash $ 6,600
Inventory 10,450
Prepaid Rent 600
Plant 40,500
Less: Accumulated depreciation (10,700 ) 29,800
Total Assets $47,450
Liabilities:
Accounts payable $6,900
Owners' Equity:
Paid in capital 20,000
Retained earnings 20,550
Total Owners' Equity 40,550
Total Liabilities and Owners' Equity $47,450