Prepare a tabular analysis of the August transactions beginn

Prepare a tabular analysis of the August transactions beginning with July 31 balances. (If a transaction results in a decrease in Assets, Liabilities or Owner\'s Equity, place a negative sign (or parentheses) in front of the amount entered for the particular Asset, Liability or Equity item that was reduced.

Prepare an income statement for August.

Prepare an owner’s equity statement for August. (List items that increase owner\'s equity first.)

Prepare a balance sheet at August 31. (List Assets in order of liquidity.)

Judi Salem opened a law office on July 1, 2017. On July 31, the balance sheet showed Cash $5,300, Accounts Receivable $2,000, Supplies $500, Equipment $6,100, Accounts Payable $3,500, and Owner’s Capital $10,400. During August, the following transactions occurred. 1. Collected $1,700 of accounts receivable. 2. Paid $2,400 cash on accounts payable. 3. Recognized revenue of $7,300, of which $2,900 is collected in cash and the balance is due in September. 4. Purchased additional equipment for $2,100, paying $300 in cash and the balance on account. 5. Paid salaries $2,300, rent for August $1,200, and advertising expenses $450. 6. Withdrew $800 in cash for personal use. 7. Received $1,900 from Standard Federal Bank—money borrowed on a note payable. 8. Incurred utility expenses for month on account $230.

Solution

ASSETS

1. Cash A\\C

Opening balance as on 01.08.17 $5300

Add: Collection from Accounts Receivable $1700

Less: Paid for Accounts Payable ($2400)

Add: Collection out of Revenue $ 2900

Less: Cash paid for Purchase of Additional Equipment ($300)

Less: Paid Salaries ($2300)

Less: Paid rent ($1200)

Less: Drawings for personal use ($800)

Add: Borrowings from Standard Federal Bank $1900

Less: Paid Advertisement charges ($ 450)

Less: Paid for Utilities ($230)

Cash Balance as on 31.08.17 $4120

2. Accounts Receivable

Opening Balance as on 01.08.17 $2000

Add: Revenue for August 17 $7300

Less: Received from Accounts Receivable ($1700)

Less Received out of August Revenue ($2900)

Balance as on 31.08.17 $ 4700

3. Equipment a\\c

Opening Balance $ 6100

Add: Purchase in August 17 $ 2100

Balance as on 31.08.17 $8200

LIABILITIES

Owners Capital A\\c as on 01.08.17 $10400

Add: Profit (working shown separately) $3120

Less: Drawings for personal use ($800)

Balance as on 31.08.17 $12720

2. Accounts Payable

Opening Balance $3500

Add: Additional Equipment Purchased on credit $1800

Less: Paid for during the month ($2400)

Balance as on 31.08.17 $2900

Working for arriving at profit

Revenue Earned for the month $ 7300

Less: Paid for

Salaries ($2300)

Rent ($1200)

Advertisement ($450)

Utilities ($230)

Profit for the month $3120

Balance Sheet as on 31.08.17

LIABILITIES ASSETS