Problem 1-2B
Cindy Belton opened a Law office, Bcindy Belton, Attorney at Law, on July 1, 2008. On July 31, the balance sheet showed that cash $4000, account receivable $1,500, supplies $500, office equipment $5,000, account payable $4,200, and common stock $6,000, and retained earning $800. During August the following transaction occurred.
1. Collected $1,400 of account receivable.
2. Paid $ 2700 cash on account payable.
3. Earned revenue $9,000 of which $3,000 is collected in cash and the balance is due in September.
4. Purchase additional equipment for $1,000, paying $400 in cash and the balance on account.
5. Paid salaries $3,000, rent for August $900, and advertising expenses $350.
6. Paid cash dividends of $750.
7. Received $2,000 from Standard Ferderal Bank- money borrowed on a note payable.
8. Incurred utility expenses for month on account $250
Instruction:
a) Prepare a tabular analysis of August transactions beginning with July 31 balance. The column heading should be follow: cash + account receivable + supplies + office equipment = note payment + account payable + common stock + retained earnings
b) Prepare an income statement for August, a retained statement for August, and balance sheet at August 31.
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