Para-Legal Services Inc. specializes in providing legal services. On July 31, 2012, the company's general ledger showed the following balances: Cash $4,000; Accounts Receivable $1,500; Supplies $500; Equipment $5,000; Accounts Payable $4,100; Common Shares $5,500; and Retained Earnings $1,400. During August, the following transactions occurred:

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

5 Received $2,300 cash for issuing common shares to new investors.

6 Paid $2,700 cash on accounts payable owing.

7 Earned fees of $6,500, of which $3,000 is collected in cash and the remainder is 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 of the fees earned on August 7.

20 Paid dividends of $500 to shareholders.

24 Billed a client $1,000 for legal services provided.

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

27 Signed an engagement letter to provide legal services to a client in September for $4,500. The client will pay the amount owing after the work has been completed.

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, $800.

Instructions

(a) Beginning with the July 31 balances, prepare a tabular analysis of the effects of the August transactions on the accounting equation.

(b) Prepare an income statement, a statement of changes in equity, and a statement of financial position for the month.