Prepare a tabular analysis of the August transactions beginning with July 31 bal
ID: 2605416 • Letter: P
Question
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.Explanation / Answer
ASSETS
1. Cash AC
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 ac
Opening Balance $ 6100
Add: Purchase in August 17 $ 2100
Balance as on 31.08.17 $8200
LIABILITIES
Owners Capital Ac 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
Owners capital Op Bal $10400 Cash $4120 Add: Profit $3120 Accounts Receivable $4700 Less: Drawings ($800) Supplies $500 Closing Owners Capital $12720 Equipment $8200 Accounts Payable $2900 Borrowings from Bank $1900 Total $17520 Total $17520