An analysis of transactions made during July 2014 by NepCo, an Internet service provider, during its first month of operations is shown below. Increases and decreases affecting revenues and expenses are explained.

Required
1. Describe the business activities that led to the accounting equation effects for each transaction shown above.
2. Prepare an income statement and a statement of retained earnings for July, and a classified balance sheet as of July 31, 2014. (These financial statements would be considered "preliminary" because they use unadjusted balances.)

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Shareholders' Equity Contributed Capital Liabilities Accounts Assets Accounts Retained Earnings Receivable Supplies Equipment Cash +11,000 Payable (a) (b) +11,000 -710 Utilities Expense +5,000 Service Revenue +710 +5,000 +10,000 +4,000 (d) -6,000 +1,000 +1,000 Service Revenue (e) +550 +550 -3,000 -3,000 -2,000 Wages Expense -750 Rent Expense -2,000 -750 (1) -1,500 +1,500 550 2,260 1,750 3,500 10,000 11,000 2,540