On July 31, 2025, the general ledger of Hills Legal Services Inc. showed the following balances: Cash \(\$ 4,000\), Accounts Receivable \(\$ 1,500\), Supplies \(\$ 500\), Equipment \(\$ 5,000\), Accounts Payable \(\$ 4,100\), Common Stock \(\$ 3,500\), and Retained Earnings \(\$ 3,400\). During August, the following transactions occurred.

Aug. 3 Collected \(\$ 1,200\) of accounts receivable due from customers.

5 Received \(\$ 1,300\) cash for issuing common stock to new investors.

6 Paid \(\$ 2,700\) cash on accounts payable.

7 Performed legal services of \(\$ 6,500\), of which \(\$ 3,000\) was collected in cash and the remainder was due on account.

12 Purchased additional equipment for \(\$ 1,200\), paying \(\$ 400\) in cash and the balance on account.

14 Paid salaries \(\$ 3,500\), rent \(\$ 900\), and advertising expenses \(\$ 275\) for the month of August.

18 Collected the balance for the services performed on August 7.

20 Paid cash dividend of \(\$ 500\) to stockholders.

24 Billed a client \(\$ 1,000\) for legal services performed.

26 Received $2,000 from Laurentian Bank; the money was borrowed on a bank note payable that is due in 6 months.

27 Agreed to perform legal services for a client in September for \(\$ 4,500\). The client will pay the amount due after the services have been performed.

28 Received the utility bill for the month of August in the amount of \(\$ 275\); it is not due until September 15 .

31 Paid income tax for the month \(\$ 500\).

Instructions

a. Using T-accounts, enter the beginning balances to the ledger.

b. Journalize the August transactions.

c. Post the August journal entries to the ledger.

d. Prepare a trial balance on August 31, 2025.