Judi Salem opened a law office on July 1, 2022. On July 31, the balances in the accounts were as follows: 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 revenues 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 summary 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. Compute total revenues and total expenses for August.

c. Compute the balance of assets, liabilities, and owner’s equity at August 31.