Record adjustments and prepare financial statements. (LO 1, 2, 3, 4)

On September 1, Irene Shannon started Shannon Check Verification Services as a corporation. Irene started the firm by contributing \(\$ 37,000\) in exchange for common stock. The new firm paid 4 months of rent in advance totaling \(\$ 1,200\) and paid 10 months of insurance in advance totaling \(\$ 6,500\). Both rent and insurance coverage began on September 1. On September 6 , the firm purchased supplies for \(\$ 800\). The firm hired one employee to help Irene and agreed to pay the assistant \(\$ 1,000\) per month, paid on the last day of each month. Shannon Check Verification Services paid \(\$ 200\) for a newspaper advertisement to announce the opening of the business. The firm earned service revenue of \(\$ 6,200\) in September, of which \(\$ 6,000\) was in cash. At the end of the month, the firm had only \(\$ 100\) worth of supplies on hand.

\section*{Required}

a. Using an accounting equation worksheet, record the transactions that occurred during the month of September and the adjustments that must be made prior to the preparation of the financial statements for the month ended September 30.

b. Prepare the four financial statements for Shannon Check Verification Services for the month ended September 30 (balance sheet at September 30).