Randy Coburn opened a law office, Randy Coburn, Attorney at Law, on July 1, 2015. On July 31, the balance sheet showed Cash $4,000, Accounts Receivable $1,500, Supplies $400, Equipment $5,000, Accounts Payable $4,200, Common Stock $6,000, and Retained Earnings $700. During August, the following transactions occurred.
1. Collected $1,400 of accounts receivable due from clients.
2. Paid $2,700 cash for accounts payable due.
3. Recognized revenue of $7,900 of which $3,000 is collected in cash and the balance is due in September.
4. Purchased 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 $250.
6. Declared and paid a $450 cash dividend.
7. Received $2,000 from Standard Federal Bank; the money was borrowed on a 4-month note payable.
8. Incurred utility expenses for month on account $180.
(a) Prepare a tabular analysis of the August transactions beginning with July 31 balances. The column headings should be as follows: Cash + Accounts Receivable + Supplies + Equipment = Notes Payable + Accounts Payable + Common Stock + Retained Earnings + Revenues – Expenses – Dividends.
(b) Prepare an income statement for August, a retained earnings statement for August, and a balance sheet at August 31.