Sue Kojima opened a law office on July 1, 2014. On July 31, the balance sheet showed Cash $5,000, Accounts Receivable $1,500, Supplies $500, Equipment $6,000, Accounts Payable $4,200, and Owner’s Capital $8,800. During August, the following transactions occurred.

1. Collected $1,200 of accounts receivable.

2. Paid $2,800 cash on accounts payable.

3. Recognized revenue of $7,500 of which $3,000 is collected in cash and the balance is due in September.

4. Purchased additional equipment for $2,000, paying $400 in cash and the balance on account.

5. Paid salaries $2,500, rent for August $900, and advertising expenses $400.

6. Withdrew $700 in cash for personal use.

7. Received $2,000 from Standard Federal Bank—money borrowed on a note payable.

8. Incurred utility expenses for month on account $270.

Instructions

(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 + Owner’s Capital – Owner’s Drawings + Revenues = Expenses.

(b) Prepare an income statement for August, an owner’s equity statement for August, and a balance sheet at August 31.