Fraser Baker opened Baker?s Accounting Service in Winnipeg on September 1, 2021. On September 30, the balance sheet showed Cash $5,700; Accounts Receivable $2,100; Supplies $350; Equipment $7,600; Accounts Payable $4,300; and F. Baker, Capital $11,450. During October, the following transactions occurred:

Instructions

a. Beginning with the September 30 balances, prepare a tabular analysis of the effects of the October transactions on the accounting equation.

b. Prepare an income statement and statement of owner?s equity for October, and a balance sheet at October 31.

Taking It Further

Fraser is confused about the accounting treatment of the October 20 transaction. Explain the reason for this treatment.

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Oct. 1 Paid $3,800 of the accounts payable. Paid $900 rent for October. 1. Collected $1,550 of the accounts receivable. 4 5 Hired a part-time office assistant at $80 per day to start work the following week. Purchased additional equipment for $4,000, paying $500 cash and signing a note payable for the balance. Performed $900 of accounting services on account. Paid $300 for advertising. Collected $400 from customers who received services on October 14. 14 15 18 Paid $500 for family dinner celebrating Fraser's son's university graduation. Borrowed $8,000 from the Manitoba Bank on a note payable. Sent a statement reminding a customer that he still owed the company money from September. Earned revenue of $5,400, of which $3,100 was paid in cash and the balance was due in 20 25 26 28 November. Paid the part-time office assistant $720 for working nine days in October. Received $2,800 cash for accounting services to be performed in November. Received the telephone bill for the month, $205. Withdrew $1,200 cash for personal expenses. 29 29 30 30