Practice Makes Perfect Inc. was started on July 1 of the current year. Practice Makes Perfect provides piano lessons for students of all abilities. You are the founder, president, office manager, etc. You have not yet hired an accountant but your bank is asking for an income statement and balance sheet for the first month of operation. Using the following information put each transaction into the equation format given in Table 3.14. Then prepare a simple income statement and a balance sheet to present to the bank. Transactions:

a. You started your company with $100,000 that you raised by selling stock in Practice Makes Perfect Inc. to your family and friends.

b. Knowing that you would need additional funds, you presented your business plan to the bank and were able to get a $50,000 loan at 10 percent.

c. You purchased three pianos for $16,000 each, paying cash. You believe these pianos will last five years before you replace them. At the end of the five years, you think you can sell each piano for $1,000.

d. You spent $2,000 on supplies, which you charged on account.

e. The newspaper bills you $500 for the advertisement you ran. You plan on paying the bill next month.

f. Rent for the space you have leased is $1,000 a month, which you paid.

g. The first month, you bill students $2,000 for lessons.

h. You pay your two part-time piano teachers $500 each at the end of the month.

i. One of your students paid the $200 invoice you sent earlier in the month.

j. You write the check for the interest owed for the month.

k. You adjust the supplies account for $300 of sheet music that you gave to students.

l. You record one month of depreciation on the pianos.